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Adam Smith

THE first duty of the sovereign, that of protecting the society from the
violence and invasion of other independent societies, can be performed only by
means of a military force. But the expense both of preparing this military force
in time of peace, and of employing it in time of war, is very different in the
different states of society, in the different periods of improvement.

Among nations of hunters, the lowest and rudest state of society, such as
we find it among the native tribes of North America, every man is a warrior as
well as a hunter. When he goes to war, either to defend his society or to
revenge the injuries which have been done to it by other societies, he maintains
himself by his own labour in the same manner as when he lives at home. His
society, for in this state of things there is properly neither sovereign nor
commonwealth, is at no sort of expense, either to prepare him for the field, or
to maintain him while he is in it.

Among nations of shepherds, a more advanced state of society, such as we
find it among the Tartars and Arabs, every man is, in the same manner, a
warrior. Such nations have commonly no fixed habitation, but live either in
tents or in a sort of covered waggons which are easily transported from place to
place. The whole tribe or nation changes its situation according to the
different seasons of the year, as well as according to other accidents. When its
herds and flocks have consumed the forage of one part of the country, it removes
to another, and from that to a third. In the dry season it comes down to the
banks of the rivers; in the wet season it retires to the upper country. When
such a nation goes to war, the warriors will not trust their herds and flocks to
the feeble defence of their old men, their women and children; and their old
men, their women and children, will not be left behind without defence and
without subsistence. The whole nation, besides, being accustomed to a wandering
life, even in time of peace, easily takes the field in time of war. Whether it
marches as an army, or moves about as a company of herdsmen, the way of life is
nearly the same, though the object proposed by it be very different. They all go
to war together, therefore, and every one does as well as he can. Among the
Tartars, even the women have been frequently known to engage in battle. If they
conquer, whatever belongs to the hostile tribe is the recompense of the victory.
But if they are vanquished, all is lost, and not only their herds and flocks,
but their women and children, become the booty of the conqueror. Even the
greater part of those who survive the action are obliged to submit to him for
the sake of immediate subsistence. The rest are commonly dissipated and
dispersed in the desert.

The ordinary life, the ordinary exercises of a Tartar or Arab, prepare
him sufficiently for war. Running, wrestling, cudgel-playing, throwing the
javelin, drawing the bow, etc., are the common pastimes of those who live in the
open air, and are all of them the images of war. When a Tartar or Arab actually
goes to war, he is maintained by his own herds and flocks which he carries with
him in the same manner as in peace. His chief or sovereign, for those nations
have all chiefs or sovereigns, is at no sort of expense in preparing him for the
field; and when he is in it the chance of plunder is the only pay which he
either expects or requires.

An army of hunters can seldom exceed two or three hundred men. The
precarious subsistence which the chase affords could seldom allow a greater
number to keep together for any considerable time. An army of shepherds, on the
contrary, may sometimes amount to two or three hundred thousand. As long as
nothing stops their progress, as long as they can go on from one district, of
which they have consumed the forage, to another which is yet entire, there seems
to be scarce any limit to the number who can march on together. A nation of
hunters can never be formidable to the civilised nations in their neighbourhood.
A nation of shepherds may. Nothing can be more contemptible than an Indian war
in North America. Nothing, on the contrary, can be more dreadful than Tartar
invasion has frequently been in Asia. The judgment of Thucydides, that both
Europe and Asia could not resist the Scythians united, has been verified by the
experience of all ages. The inhabitants of the extensive but defenceless plains
of Scythia or Tartary have been frequently united under the dominion of the
chief of some conquering horde or clan, and the havoc and devastation of Asia
have always signalized their union. The inhabitants of the inhospitable deserts
of Arabia, the other great nation of shepherds, have never been united but once;
under Mahomet and his immediate successors. Their union, which was more the
effect of religious enthusiasm than of conquest, was signalized in the same
manner. If the hunting nations of America should ever become shepherds, their
neighbourhood would be much more dangerous to the European colonies than it is
at present.

In a yet more advanced state of society, among those nations of
husbandmen who have little foreign commerce, and no other manufactures but those
coarse and household ones which almost every private family prepares for its own
use, every man, in the same manner, either is a warrior or easily becomes such.
They who live by agriculture generally pass the whole day in the open air,
exposed to all the inclemencies of the seasons. The hardiness of their ordinary
life prepares them for the fatigues of war, to some of which their necessary
occupations bear a great analogy. The necessary occupation of a ditcher prepares
him to work in the trenches, and to fortify a camp as well as to enclose a
field. The ordinary pastimes of such husbandmen are the same as those of
shepherds, and are in the same manner the images of war. But as husbandmen have
less leisure than shepherds, they are not so frequently employed in those
pastimes. They are soldiers, but soldiers not quite so much masters of their
exercise. Such as they are, however, it seldom costs the sovereign or
commonwealth any expense to prepare them for the field.

Agriculture, even in its rudest and lowest state, supposes a settlement:
some sort of fixed habitation which cannot be abandoned without great loss. When
a nation of mere husbandmen, therefore, goes to war, the whole people cannot
take the field together. The old men, the women and children, at least, must
remain at home to take care of the habitation. All the men of the military age,
however, may take the field, and, in small nations of this kind, have frequently
done so. In every nation the men of the military age are supposed to amount to
about a fourth or a fifth part of the whole body of the people. If the campaign,
should begin after seed-time, and end before harvest, both the husbandman and
his principal labourers can be spared from the farm without much loss. He trusts
that the work which must be done in the meantime can be well enough executed by
the old men, the women, and the children. He is not unwilling, therefore, to
serve without pay during a short campaign, and it frequently costs the sovereign
or commonwealth as little to maintain him in the field as to prepare him for it.
The citizens of all the different states of ancient Greece seem to have served
in this manner till after the second Persian war; and the people of Peloponnesus
till after the Peloponnesian war. The Peloponnesians, Thucydides observes,
generally left the field in the summer, and returned home to reap the harvest.
The Roman people under their kings, and during the first ages of the republic,
served in the same manner. It was not till the siege of Veii that they who
stayed at home began to contribute something towards maintaining those who went
to war. In the European monarchies, which were founded upon the ruins of the
Roman empire, both before and for some time after the establishment of what is
properly called the feudal law, the great lords, with all their immediate
dependents, used to serve the crown at their own expense. In the field, in the
same manner as at home, they maintained themselves by their own revenue, and not
by any stipend or pay which they received from the king upon that particular
occasion.

In a more advanced state of society, two different causes contribute to
render it altogether impossible that they who take the field should maintain
themselves at their own expense. Those two causes are, the progress of
manufactures, and the improvement in the art of war.

Though a husbandman should be employed in an expedition, provided it
begins after seed-time and ends before harvest, the interruption of his business
will not always occasion any considerable diminution of his revenue. Without the
intervention of his labour, nature does herself the greater part of the work
which remains to be done. But the moment that an artificer, a smith, a
carpenter, or a weaver, for example, quits his workhouse, the sole source of his
revenue is completely dried up. Nature does nothing for him, he does all for
himself. When he takes the field, therefore, in defence of the public, as he has
no revenue to maintain himself, he must necessarily be maintained by the public.
But in a country of which a great part of the inhabitants are artificers and
manufacturers, a great part of the people who go to war must be drawn from those
classes, and must therefore be maintained by the public as long as they are
employed in its service.

When the art of war, too, has gradually grown up to be a very intricate
and complicated science, when the event of war ceases to be determined, as in
the first ages of society, by a single irregular skirmish or battle, but when
the contest is generally spun out through several different campaigns, each of
which lasts during the greater part of the year, it becomes universally
necessary that the public should maintain those who serve the public in war, at
least while they are employed in that service. Whatever in time of peace might
be the ordinary occupation of those who go to war, so very tedious and expensive
a service would otherwise be far too heavy a burden upon them. After the second
Persian war, accordingly, the armies of Athens seem to have been generally
composed of mercenary troops, consisting, indeed, partly of citizens, but partly
too of foreigners, and all of them equally hired and paid at the expense of the
state. From the time of the siege of Veii, the armies of Rome received pay for
their service during the time which they remained in the field. Under the feudal
governments the military service both of the great lords and of their immediate
dependants was, after a certain period, universally exchanged for a payment in
money, which was employed to maintain those who served in their stead.

The number of those who can go to war, in proportion to the whole number
of the people, is necessarily much smaller in a civilised than in a rude state
of society. In a civilised society, as the soldiers are maintained altogether by
the labour of those who are not soldiers, the number of the former can never
exceed what the latter can maintain, over and above maintaining, in a manner
suitable to their respective stations, both themselves and the other officers of
government and law whom they are obliged to maintain. In the little agrarian
states of ancient Greece, a fourth or a fifth part of the whole body of the
people considered themselves as soldiers, and would sometimes, it is said, take
a field. Among the civilised nations of modern Europe, it is commonly computed
that not more than one-hundredth part of the inhabitants in any country can be
employed as soldiers without ruin to the country which pays the expenses of
their service.

The expense of preparing the army for the field seems not to have become
considerable in any nation till long after that of maintaining it in the field
had devolved entirely upon the sovereign or commonwealth. In all the different
republics of ancient Greece, to learn his military exercises was a necessary
part of education imposed by the state upon every free citizen. In every city
there seems to have been a public field, in which, under the protection of the
public magistrate, the young people were taught their different exercises by
different masters. In this very simple institution consisted the whole expense
which any Grecian state seems ever to have been at in preparing its citizens for
war. In ancient Rome the exercises of the Campus Martius answered the same
purpose with those of the Gymnasium in ancient Greece. Under the feudal
governments, the many public ordinances that the citizens of every district
should practise archery as well as several other military exercises were
intended for promoting the same purpose, but do not seem to have promoted it so
well. Either from want of interest in the officers entrusted with the execution
of those ordinances, or from some other cause, they appear to have been
universally neglected; and in the progress of all those governments, military
exercises seem to have gone gradually into disuse among the great body of the
people.

In the republics of ancient Greece and Rome, during the whole period of
their existence, and under the feudal governments for a considerable time after
their first establishment, the trade of a soldier was not a separate, distinct
trade, which constituted the sole or principal occupation of a particular class
of citizens. Every subject of the state, whatever might be the ordinary trade or
occupation by which he gained his livelihood, considered himself, upon all
ordinary occasions, as fit likewise to exercise the trade of a soldier, and upon
many extraordinary occasions as bound to exercise it.

The art of war, however, as it is certainly the noblest of all arts, so
in the progress of improvement it necessarily becomes one of the most
complicated among them. The state of the mechanical, as well as of some other
arts, with which it is necessarily connected, determines the degree of
perfection to which it is capable of being carried at any particular time. But
in order to carry it to this degree of perfection, it is necessary that it
should become the sole or principal occupation of a particular class of
citizens, and the division of labour is as necessary for the improvement of
this, as of every other art. Into other arts the division of labour is naturally
introduced by the prudence of individuals, who find that they promote their
private interest better by confining themselves to a particular trade than by
exercising a great number. But it is the wisdom of the state only which can
render the trade of a soldier a particular trade separate and distinct from all
others. A private citizen who, in time of profound peace, and without any
particular encouragement from the public, should spend the greater part of his
time in military exercises, might, no doubt, both improve himself very much in
them, and amuse himself very well; but he certainly would not promote his own
interest. It is the wisdom of the state only which can render it for his
interest to give up the greater part of his time to this peculiar occupation:
and states have not always had this wisdom, even when their circumstances had
become such that the preservation of their existence required that they should
have it.

A shepherd has a great deal of leisure; a husbandman, in the rude state
of husbandry, has some; an artificer or manufacturer has none at all. The first
may, without any loss, employ a great deal of his time in martial exercises; the
second may employ some part of it; but the last cannot employ a single hour in
them without some loss, and his attention to his own interest naturally leads
him to neglect them altogether. These improvements in husbandry too, which the
progress of arts and manufactures necessarily introduces, leave the husbandman
as little leisure as the artificer. Military exercises come to be as much
neglected by the inhabitants of the country as by those of the town, and the
great body of the people becomes altogether unwarlike. That wealth, at the same
time, which always follows the improvements of agriculture and manufactures, and
which in reality is no more than the accumulated produce of those improvements,
provokes the invasion of all their neighbours. An industrious, and upon that
account a wealthy nation, is of all nations the most likely to be attacked; and
unless the state takes some new measures for the public defence, the natural
habits of the people render them altogether incapable of defending themselves.

In these circumstances there seem to be but two methods by which the
state can make any tolerable provision for the public defence.

It may either, first, by means of a very rigorous police, and in spite of
the whole bent of the interest, genius, and inclinations of the people, enforce
the practice of military exercises, and oblige either all the citizens of the
military age, or a certain number of them, to join in some measure the trade of
a soldier to whatever other trade or profession they may happen to carry on.

Or, secondly, by maintaining and employing a certain number of citizens
in the constant practice of military exercises, it may render the trade of a
soldier a particular trade, separate and distinct from all others.

If the state has recourse to the first of those two expedients, its
military force is said to consist in a militia; if to the second, it is said to
consist in a standing army. The practice of military exercises is the sole or
principal occupation of the soldiers of a standing army, and the maintenance or
pay which the state affords them is the principal and ordinary fund of their
subsistence. The practice of military exercises is only the occasional
occupation of the soldiers of a militia, and they derive the principal and
ordinary fund of their subsistence from some other occupation. In a militia, the
character of the labourer, artificer, or tradesman, predominates over that of
the soldier; in a standing army, that of the soldier predominates over every
other character: and in this distinction seems to consist the essential
difference between those two different species of military force.

Militias have been of several different kinds. In some countries the
citizens destined for defending the states seem to have been exercised only,
without being, if I may say so, regimented; that is, without being divided into
separate and distinct bodies of troops, each of which performed its exercises
under its own proper and permanent officers. In the republics of ancient Greece
and Rome, each citizen, as long as he remained at home, seems to have practised
his exercises either separately and independently, or with such of his equals as
he liked best, and not to have been attached to any particular body of troops
till he was actually called upon to take the field. In other countries, the
militia has not only been exercised, but regimented. In England, in Switzerland,
and, I believe, in every other country of modern Europe where any imperfect
military force of this kind has been established, every militiaman is, even in
time of peace, attached to a particular body of troops, which performs its
exercises under its own proper and permanent officers.

Before the invention of firearms, that army was superior in which the
soldiers had, each individually, the greatest skill and dexterity in the use of
their arms. Strength and agility of body were of the highest consequence, and
commonly determined the state of battles. But this skill and dexterity in the
use of their arms could be acquired only, in the same manner as fencing is at
present, by practising, not in great bodies, but each man separately, in a
particular school, under a particular master, or with his own particular equals
and companions. Since the invention of firearms, strength and agility of body,
or even extraordinary dexterity and skill in the use of arms, though they are
far from being of no consequence, are, however, of less consequence. The nature
of the weapon, though it by no means puts the awkward upon a level with the
skilful, puts him more nearly so than he ever was before. All the dexterity and
skill, it is supposed, which are necessary for using it, can be well enough
acquired by practising in great bodies.

Regularity, order, and prompt obedience to command are qualities which,
in modern armies, are of more importance towards determining the fate of battles
than the dexterity and skill of the soldiers in the use of their arms. But the
noise of firearms, the smoke, and the invisible death to which every man feels
himself every moment exposed as soon as he comes within cannon-shot, and
frequently a long time before the battle can be well said to be engaged, must
render it very difficult to maintain any considerable degree of this regularity,
order, and prompt obedience, even in the beginning of a modern battle. In an
ancient battle there was no noise but what arose from the human voice; there was
no smoke, there was no invisible cause of wounds or death. Every man, till some
mortal weapon actually did approach him, saw clearly that no such weapon was
near him. In these circumstances, and among troops who had some confidence in
their own skill and dexterity in the use of their arms, it must have been a good
deal less difficult to preserve some degree regularity and order, not only in
the beginning, but through the whole progress of an ancient battle, and till one
of the two armies was fairly defeated. But the habits of regularity, order, and
prompt obedience to command can be acquired only by troops which are exercised
in great bodies.

A militia, however, in whatever manner it may be either disciplined or
exercised, must always be much inferior to a well-disciplined and well-exercised
standing army.

The soldiers who are exercised only once a week, or once a month, can
never be so expert in the use of their arms as those who are exercised every
day, or every other day; and though this circumstance may not be of so much
consequence in modern as it was in ancient times, yet the acknowledged
superiority of the Prussian troops, owing, it is said, very much to their
superior expertness in their exercise, may satisfy us that it is, even at this
day, of very considerable consequence.

The soldiers who are bound to obey their officer only once a week or once
a month, and who are at all other times at liberty to manage their own affairs
their own way, without being in any respect accountable to him, can never be
under the same awe in his presence, can never have the same disposition to ready
obedience, with those whose whole life and conduct are every day directed by
him, and who every day even rise and go to bed, or at least retire to their
quarters, according to his orders. In what is called discipline, or in the habit
of ready obedience, a militia must always be still more inferior to a standing
army than it may sometimes be in what is called the manual exercise, or in the
management and use of its arms. But in modern war the habit of ready and instant
obedience is of much greater consequence than a considerable superiority in the
management of arms.

Those militias which, like the Tartar or Arab militia, go to war under
the same chieftains whom they are accustomed to obey in peace are by far the
best. In respect for their officers, in the habit of ready obedience, they
approach nearest to standing armies. The highland militia, when it served under
its own chieftains, had some advantage of the same kind. As the highlanders,
however, were not wandering, but stationary shepherds, as they had all a fixed
habitation, and were not, in peaceable times, accustomed to follow their
chieftain from place to place, so in time of war they were less willing to
follow him to any considerable distance, or to continue for any long time in the
field. When they had acquired any booty they were eager to return home, and his
authority was seldom sufficient to detain them. In point of obedience they were
always much inferior to what is reported of the Tartars and Arabs. As the
highlanders too, from their stationary life, spend less of their time in the
open air, they were always less accustomed to military exercises, and were less
expert in the use of their arms than the Tartars and Arabs are said to be.

A militia of any kind, it must be observed, however, which has served for
several successive campaigns in the field, becomes in every respect a standing
army. The soldiers are every day exercised in the use of their arms, and, being
constantly under the command of their officers, are habituated to the same
prompt obedience which takes place in standing armies. What they were before
they took the field is of little importance. They necessarily become in every
respect a standing army after they have passed a few campaigns in it. Should the
war in America drag out through another campaign, the American militia may
become in every respect a match for that standing army of which the valour
appeared, in the last war, at least not inferior to that of the hardiest
veterans of France and Spain.

This distinction being well understood, the history of all ages, it will
be found, bears testimony to the irresistible superiority which a well-regulated
standing army has over a militia.

One of the first standing armies of which we have any distinct account,
in any well authenticated history, is that of Philip of Macedon. His frequent
wars with the Thracians, Illyrians, Thessalians, and some of the Greek cities in
the neighbourhood of Macedon, gradually formed his troops, which in the
beginning were probably militia, to the exact discipline of a standing army.
When he was at peace, which he was very seldom, and never for any long time
together, he was careful not to disband that army. It vanquished and subdued,
after a long and violent struggle, indeed, the gallant and well exercised
militias of the principal republics of ancient Greece, and afterwards, with very
little struggle, the effeminate and ill-exercised militia of the great Persian
empire. The fall of the Greek republics and of the Persian empire was the effect
of the irresistible superiority which a standing army has over every sort of
militia. It is the first great revolution in the affairs of mankind of which
history has preserved any distinct or circumstantial account.

The fall of Carthage, and the consequent elevation of Rome, is the
second. All the varieties in the fortune of those two famous republics may very
well be accounted for from the same cause.

From the end of the first to the beginning of the second Carthaginian war
the armies of Carthage were continually in the field, and employed under three
great generals, who succeeded one another in the command: Hamilcar, his
son-in-law Hasdrubal, and his son Hannibal; first in chastising their own
rebellious slaves, afterwards in subduing the revolted nations of Africa, and,
lastly, in conquering the great kingdom of Spain. The army which Hannibal led
from Spain into Italy must necessarily, in those different wars, have been
gradually formed to the exact discipline of a standing army. The Romans, in the
meantime, though they had not been altogether at peace, yet they had not, during
this period, been engaged in any war of very great consequence, and their
military discipline, it is generally said, was a good deal relaxed. The Roman
armies which Hannibal encountered at Trebia, Thrasymenus, and Cannae were
militia opposed to a standing army. This circumstance, it is probable,
contributed more than any other to determine the fate of those battles.

The standing army which Hannibal left behind him in Spain had the like
superiority over the militia which the Romans sent to oppose it, and in a few
years, under the command of his brother, the younger Hasdrubal, expelled them
almost entirely from that country.

Hannibal was ill supplied from home. The Roman militia, being continually
in the field, became in the progress of the war a well disciplined and
well-exercised standing army, and the superiority of Hannibal grew every day
less and less. Hasdrubal judged it necessary to lead the whole, or almost the
whole of the standing army which he commanded in Spain, to the assistance of his
brother in Italy. In this march he is said to have been misled by his guides,
and in a country which he did not know, was surprised and attacked by another
standing army, in every respect equal or superior to his own, and was entirely
defeated.

When Hasdrubal had left Spain, the great Scipio found nothing to oppose
him but a militia inferior to his own. He conquered and subdued that militia,
and, in the course of the war, his own militia necessarily became a
well-disciplined and well-exercised standing army. That standing army was
afterwards carried to Africa, where it found nothing but a militia to oppose it.
In order to defend Carthage it became necessary to recall the standing army of
Hannibal. The disheartened and frequently defeated African militia joined it,
and, at the battle of Zama, composed the greater part of the troops of Hannibal.
The event of that day determined the fate of the two rival republics.

From the end of the second Carthaginian war till the fall of the Roman
republic, the armies of Rome were in every respect standing armies. The standing
army of Macedon made some resistance to their arms. In the height of their
grandeur it cost them two great wars, and three great battles, to subdue that
little kingdom, of which the conquest would probably have been still more
difficult had it not been for the cowardice of its last king. The militias of
all the civilised nations of the ancient world, of Greece, of Syria, and of
Egypt, made but a feeble resistance to the standing armies of Rome. The militias
of some barbarous nations defended themselves much better. The Scythian or
Tartar militia, which Mithridates drew from the countries north of the Euxine
and Caspian seas, were the most formidable enemies whom the Romans had to
encounter after the second Carthaginian war. The Parthian and German militias,
too, were always respectable, and upon several occasions gained very
considerable advantages over the Roman armies. In general, however, and when the
Roman armies were well commanded, they appear to have been very much superior;
and if the Romans did not pursue the final conquest either of Parthia or
Germany, it was probably because they judged that it was not worth while to add
those two barbarous countries to an empire which was already too large. The
ancient Parthians appear to have been a nation of Scythian or Tartar extraction,
and to have always retained a good deal of the manners of their ancestors. The
ancient Germans were, like the Scythians or Tartars, a nation of wandering
shepherds, who went to war under the same chiefs whom they were accustomed to
follow in peace. Their militia was exactly of the same kind with that of the
Scythians or Tartars, from whom, too, they were probably descended.

Many different causes contributed to relax the discipline of the Roman
armies. Its extreme severity was, perhaps, one of those causes. In the days of
their grandeur, when no enemy appeared capable of opposing them, their heavy
armour was laid aside as unnecessarily burdensome, their labourious exercises
were neglected as unnecessarily toilsome. Under the Roman emperors, besides, the
standing armies of Rome, those particularly which guarded the German and
Pannonian frontiers, became dangerous to their masters, against whom they used
frequently to set up their own generals. In order to render them less
formidable, according to some authors, Dioclesian, according to others,
Constantine, first withdrew them from the frontier, where they had always before
been encamped in great bodies, generally of two or three legions each, and
dispersed them in small bodies through the different provincial towns, from
whence they were scarce ever removed but when it became necessary to repel an
invasion. Small bodies of soldiers quartered, in trading and manufacturing
towns, and seldom removed from those quarters, became themselves tradesmen,
artificers, and manufacturers. The civil came to predominate over the military
character, and the standing armies of Rome gradually degenerated into a corrupt,
neglected, and undisciplined militia, incapable of resisting the attack of the
German and Scythian militias, which soon afterwards invaded the western empire.
It was only by hiring the militia of some of those nations to oppose to that of
others that the emperors were for some time able to defend themselves. The fall
of the western empire is the third great revolution in the affairs of mankind of
which ancient history has preserved any distinct or circumstantial account. It
was brought about by the irresistible superiority which the militia of a
barbarous has over that of a civilised nation; which the militia of a nation of
shepherds has over that of a nation of husbandmen, artificers, and
manufacturers. The victories which have been gained by militias have generally
been, not over standing armies, but over other militias in exercise and
discipline inferior to themselves. Such were the victories which the Greek
militia gained over that of the Persian empire; and such too were those which in
later times the Swiss militia gained over that of the Austrians and Burgundians.

The military force of the German and Scythian nations who established
themselves upon the ruins of the western empire continued for some time to be of
the same kind in their new settlements as it had been in their original country.
It was a militia of shepherds and husbandmen, which, in time of war, took the
field under the command of the same chieftains whom it was accustomed to obey in
peace. It was, therefore, tolerably well exercised, and tolerably well
disciplined. As arts and industry advanced, however, the authority of the
chieftains gradually decayed, and the great body of the people had less time to
spare for military exercises. Both the discipline and the exercise of the feudal
militia, therefore, went gradually to ruin, and standing armies were gradually
introduced to supply the place of it. When the expedient of a standing army,
besides, had once been adopted by one civilised nation, it became necessary that
all its neighbours should follow their example. They soon found that their
safety depended upon their doing so, and that their own militia was altogether
incapable of resisting the attack of such an army.

The soldiers of a standing army, though they may never have seen an
enemy, yet have frequently appeared to possess all the courage of veteran troops
and the very moment that they took the field to have been fit to face the
hardiest and most experienced veterans. In 1756, when the Russian army marched
into Poland, the valour of the Russian soldiers did not appear inferior to that
of the Prussians, at that time supposed to be the hardiest and most experienced
veterans in Europe. The Russian empire, however, had enjoyed a profound peace
for near twenty years before, and could at that time have very few soldiers who
had ever seen an enemy. When the Spanish war broke out in 1739, England had
enjoyed a profound peace for about eight-and-twenty years. The valour of her
soldiers, however, far from being corrupted by that long peace, was never more
distinguished than in the attempt upon Carthagena, the first unfortunate exploit
of that unfortunate war. In a long peace the generals, perhaps, may sometimes
forget their skill; but, where a well-regulated standing army has been kept up,
the soldiers seem never to forget their valour.

When a civilised nation depends for its defence upon a militia, it is at
all times exposed to be conquered by any barbarous nation which happens to be in
its neighbourhood. The frequent conquests of all the civilised countries in Asia
by the Tartars sufficiently demonstrates the natural superiority which the
militia of a barbarous has over that of a civilised nation. A well-regulated
standing army is superior to every militia. Such an army, as it can best be
maintained by an opulent and civilised nation, so it can alone defend such a
nation against the invasion of a poor and barbarous neighbour. It is only by
means of a standing army, therefore, that the civilization of any country can be
perpetuated, or even preserved for any considerable time.

As it is only by means of a well-regulated standing army that a civilised
country can be defended, so it is only by means of it that a barbarous country
can be suddenly and tolerably civilised. A standing army establishes, with an
irresistible force, the law of the sovereign through the remotest provinces of
the empire, and maintains some degree of regular government in countries which
could not otherwise admit of any. Whoever examines, with attention, the
improvements which Peter the Great introduced into the Russian empire, will find
that they almost all resolve themselves into the establishment of a well
regulated standing army. It is the instrument which executes and maintains all
his other regulations. That degree of order and internal peace which that empire
has ever since enjoyed is altogether owing to the influence of that army.

Men of republican principles have been jealous of a standing army as
dangerous to liberty. It certainly is so wherever the interest of the general
and that of the principal officers are not necessarily connected with the
support of the constitution of the state. The standing army of Caesar destroyed
the Roman republic. The standing army of Cromwell turned the Long Parliament out
of doors. But where the sovereign is himself the general, and the principal
nobility and gentry of the country the chief officers of the army, where the
military force is placed under the command of those who have the greatest
interest in the support of the civil authority, because they have themselves the
greatest share of that authority, a standing army can never be dangerous to
liberty. On the contrary, it may in some cases be favourable to liberty. The
security which it gives to the sovereign renders unnecessary that troublesome
jealousy, which, in some modern republics, seems to watch over the minutest
actions, and to be at all times ready to disturb the peace of every citizen.
Where the security of the magistrate, though supported by the principal people
of the country, is endangered by every popular discontent; where a small tumult
is capable of bringing about in a few hours a great revolution, the whole
authority of government must be employed to suppress and punish every murmur and
complaint against it. To a sovereign, on the contrary, who feels himself
supported, not only by the natural aristocracy of the country, but by a
well-regulated standing army, the rudest, the most groundless, and the most
licentious remonstrances can give little disturbance. He can safely pardon or
neglect them, and his consciousness of his own superiority naturally disposes
him to do so. That degree of liberty which approaches to licentiousness can be
tolerated only in countries where the sovereign is secured by a well-regulated
standing army. It is in such countries only that the public safety does not
require that the sovereign should be trusted with any discretionary power for
suppressing even the impertinent wantonness of this licentious liberty.

The first duty of the sovereign, therefore, that of defending the society
from the violence and injustice of other independent societies, grows gradually
more and more expensive as the society advances in civilization. The military
force of the society, which originally cost the sovereign no expense either in
time of peace or in time of war, must, in the progress of improvement, first be
maintained by him in time of war, and afterwards even in time of peace.

The great change introduced into the art of war by the invention of
firearms has enhanced still further both the expense of exercising and
disciplining any particular number of soldiers in time of peace, and that of
employing them in time of war. Both their arms and their ammunition are become
more expensive. A musket is a more expensive machine than a javelin or a bow and
arrows; a cannon or a mortar than a balista or a catapulta. The powder which is
spent in a modern review is lost irrecoverably, and occasions a very
considerable expense. The javeline and arrows which were thrown or shot in an
ancient one could easily be picked up again, and were besides of very little
value. The cannon and the mortar are not only much dearer, but much heavier
machines than the balista or catapulta, and require a greater expense, not only
to prepare them for the field, but to carry them to it. As the superiority of
the modern artillery too over that of the ancients is very great, it has become
much more difficult, and consequently much more expensive, to fortify a town so
as to resist even for a few weeks the attack of that superior artillery. In
modern times many different causes contribute to render the defence of the
society more expensive. The unavoidable effects of the natural progress of
improvement have, in this respect, been a good deal enhanced by a great
revolution in the art of war, to which a mere accident, the invention of
gunpowder, seems to have given occasion.

In modern war the great expense of firearms gives an evident advantage to
the nation which can best afford that expense, and consequently to an opulent
and civilised over a poor and barbarous nation. In ancient times the opulent and
civilised found it difficult to defend themselves against the poor and barbarous
nations. In modern times the poor and barbarous find it difficult to defend
themselves against the opulent and civilised. The invention of firearms, an
invention which at first sight appears to be so pernicious, is certainly
favourable both to the permanency and to the extension of civilization.

PART
2

Of the
Expense of Justice

THE second duty of the sovereign, that of protecting, as far as possible,
every member of the society from the injustice or oppression of every other
member of it, or the duty of establishing an exact administration of justice,
requires, too, very different degrees of expense in the different periods of
society.

Among nations of hunters, as there is scarce any property, or at least
none that exceeds the value of two or three days' labour, so there is seldom any
established magistrate or any regular administration of justice. Men who have no
property can injure one another only in their persons or reputations. But when
one man kills, wounds, beats, or defames another, though he to whom the injury
is done suffers, he who does it receives no benefit. It is otherwise with the
injuries to property. The benefit of the person who does the injury is often
equal to the loss of him who suffers it. Envy, malice, or resentment are the
only passions which can prompt one man to injure another in his person or
reputation. But the greater part of men are not very frequently under the
influence of those passions, and the very worst of men are so only occasionally.
As their gratification too, how agreeable soever it may be to certain
characters, is not attended with any real or permanent advantage, it is in the
greater part of men commonly restrained by prudential considerations. Men may
live together in society with some tolerable degree of security, though there is
no civil magistrate to protect them from the injustice of those passions. But
avarice and ambition in the rich, in the poor the hatred of labour and the love
of present ease and enjoyment, are the passions which prompt to invade property,
passions much more steady in their operation, and much more universal in their
influence. Wherever there is great property there is great inequality. For one
very rich man there must be at least five hundred poor, and the affluence of the
few supposes the indigence of the many. The affluence of the rich excites the
indignation of the poor, who are often both driven by want, and prompted by
envy, to invade his possessions. It is only under the shelter of the civil
magistrate that the owner of that valuable property, which is acquired by the
labour of many years, or perhaps of many successive generations, can sleep a
single night in security. He is at all times surrounded by unknown enemies,
whom, though he never provoked, he can never appease, and from whose injustice
he can be protected only by the powerful arm of the civil magistrate continually
held up to chastise it. The acquisition of valuable and extensive property,
therefore, necessarily requires the establishment of civil government. Where
there is no property, or at least none that exceeds the value of two or three
days' labour, civil government is not so necessary.

Civil government supposes a certain subordination. But as the necessity
of civil government gradually grows up with the acquisition of valuable
property, so the principal causes which naturally introduce subordination
gradually grow up with the growth of that valuable property.

The causes or circumstances which naturally introduce subordination, or
which naturally, and antecedent to any civil institution, give some men some
superiority over the greater part of their brethren, seem to be four in number.

The first of those causes or circumstances is the superiority of personal
qualifications, of strength, beauty, and agility of body; of wisdom and virtue,
of prudence, justice, fortitude, and moderation of mind. The qualifications of
the body, unless supported by those of the mind, can give little authority in
any period of society. He is a very strong man, who, by mere strength of body,
can force two weak ones to obey him. The qualifications of the mind can alone
give a very great authority. They are, however, invisible qualities; always
disputable, and generally disputed. No society, whether barbarous or civilised,
has ever found it convenient to settle the rules of precedency of rank and
subordination according to those invisible qualities; but according to something
that is more plain and palpable.

The second of those causes or circumstances is the superiority of age. An
old man, provided his age is not so far advanced as to give suspicion of dotage,
is everywhere more respected than a young man of equal rank, fortune, and
abilities. Among nations of hunters, such as the native tribes of North America,
age is the sole foundation of rank and precedency. Among them, father is the
appellation of a superior; brother, of an equal; and son, of an inferior. In the
most opulent and civilised nations, age regulates rank among those who are in
every other respect equal, and among whom, therefore, there is nothing else to
regulate it. Among brothers and among sisters, the eldest always takes place;
and in the succession of the paternal estate everything which cannot be divided,
but must go entire to one person, such as a title of honour, is in most cases
given to the eldest. Age is a plain and palpable quality which admits of no
dispute.

The third of those causes or circumstances is the superiority of fortune.
The authority of riches, however, though great in every age of society, is
perhaps greatest in the rudest age of society which admits of any considerable
inequality of fortune. A Tartar chief, the increase of whose herds and stocks is
sufficient to maintain a thousand men, cannot well employ that increase in any
other way than in maintaining a thousand men. The rude state of his society does
not afford him any manufactured produce, any trinkets or baubles of any kind,
for which he can exchange that part of his rude produce which is over and above
his own consumption. The thousand men whom he thus maintains, depending entirely
upon him for their subsistence, must both obey his orders in war, and submit to
his jurisdiction in peace. He is necessarily both their general and their judge,
and his chieftainship is the necessary effect of the superiority of his fortune.
In an opulent and civilised society, a man may possess a much greater fortune
and yet not be able to command a dozen people. Though the produce of his estate
may be sufficient to maintain, and may perhaps actually maintain, more than a
thousand people, yet as those people pay for everything which they get from him,
as he gives scarce anything to anybody but in exchange for an equivalent, there
is scarce anybody who considers himself as entirely dependent upon him, and his
authority extends only over a few menial servants. The authority of fortune,
however, is very great even in an opulent and civilised society. That it is much
greater than that either of age or of personal qualities has been the constant
complaint of every period of society which admitted of any considerable
inequality of fortune. The first period of society, that of hunters, admits of
no such inequality. Universal poverty establishes their universal equality, and
the superiority either of age or of personal qualities are the feeble but the
sole foundations of authority and subordination. There is therefore little or no
authority or subordination in this period of society. The second period of
society, that of shepherds, admits of very great inequalities of fortune, and
there is no period in which the superiority of fortune gives so great authority
to those who possess it. There is no period accordingly in which authority and
subordination are more perfectly established. The authority of an Arabian sherif
is very great; that of a Tartar khan altogether despotical.

The fourth of those causes or circumstances is the superiority of birth.
Superiority of birth supposes an ancient superiority of fortune in the family of
the person who claims it. All families are equally ancient; and the ancestors of
the prince, though they may be better known, cannot well be more numerous than
those of the beggar. Antiquity of family means everywhere the antiquity either
of wealth, or of that greatness which is commonly either founded upon wealth, or
accompanied with it. Upstart greatness is everywhere less respected than ancient
greatness. The hatred of usurpers, the love of the family of an ancient monarch,
are, in a great measure, founded upon the contempt which men naturally have for
the former, and upon their veneration for the latter. As a military officer
submits without reluctance to the authority of a superior by whom he has always
been commanded, but cannot bear that his inferior should be set over his head,
so men easily submit to a family to whom they and their ancestors have always
submitted; but are fired with indignation when another family, in whom they had
never acknowledged any such superiority, assumes a dominion over them.

The distinction of birth, being subsequent to the inequality of fortune,
can have no place in nations of hunters, among whom all men, being equal in
fortune, must likewise be very nearly equal in birth. The son of a wise and
brave man may, indeed, even among them, be somewhat more respected than a man of
equal merit who has the misfortune to be the son of a fool or a coward. The
difference, however, will not be very great; and there never was, I believe, a
great family in the world whose illustration was entirely derived from the
inheritance of wisdom and virtue.

The distinction of birth not only may, but always does take place among
nations of shepherds. Such nations are always strangers to every sort of luxury,
and great wealth can scarce ever be dissipated among them by improvident
profusion. There are no nations accordingly who abound more in families revered
and honoured on account of their descent from a long race of great and
illustrious ancestors, because there are no nations among whom wealth is likely
to continue longer in the same families.

Birth and fortune are evidently the two circumstances which principally
set one man above another. They are the two great sources of personal
distinction, and are therefore the principal causes which naturally establish
authority and subordination among men. Among nations of shepherds both those
causes operate with their full force. The great shepherd or herdsman, respected
on account of his great wealth, and of the great number of those who depend upon
him for subsistence, and revered on account of the nobleness of his birth, and
of the immemorial antiquity of his illustrious family, has a natural authority
over all the inferior shepherds or herdsmen of his horde or clan. He can command
the united force of a greater number of people than any of them. His military
power is greater than that of any of them. In time of war they are all of them
naturally disposed to muster themselves under his banner, rather than under that
of any other person, and his birth and fortune thus naturally procure to him
some sort of executive power. By commanding, too, the united force of a greater
number of people than any of them, he is best able to compel any one of them who
may have injured another to compensate the wrong. He is the person, therefore,
to whom all those who are too weak to defend themselves naturally look up for
protection. It is to him that they naturally complain of the injuries which they
imagine have been done to them, and his interposition in such cases is more
easily submitted to, even by the person complained of, than that of any other
person would be. His birth and fortune thus naturally procure him some sort of
judicial authority.

It is in the age of shepherds, in the second period of society, that the
inequality of fortune first begins to take place, and introduces among men a
degree of authority and subordination which could not possibly exist before. It
thereby introduces some degree of that civil government which is indispensably
necessary for its own preservation: and it seems to do this naturally, and even
independent of the consideration of that necessity. The consideration of that
necessity comes no doubt afterwards to contribute very much to maintain and
secure that authority and subordination. The rich, in particular, are
necessarily interested to support that order of things which can alone secure
them in the possession of their own advantages. Men of inferior wealth combine
to defend those of superior wealth in the possession of their property, in order
that men of superior wealth may combine to defend them in the possession of
theirs. All the inferior shepherds and herdsmen feel that the security of their
own herds and flocks depends upon the security of those of the great shepherd or
herdsman; that the maintenance of their lesser authority depends upon that of
his greater authority, and that upon their subordination to him depends his
power of keeping their inferiors in subordination to them. They constitute a
sort of little nobility, who feel themselves interested to defend the property
and to support the authority of their own little sovereign in order that he may
be able to defend their property and to support their authority. Civil
government, so far as it is instituted for the security of property, is in
reality instituted for the defence of the rich against the poor, or of those who
have some property against those who have none at all.

The judicial authority of such a sovereign, however, far from being a
cause of expense, was for a long time a source of revenue to him. The persons
who applied to him for justice were always willing to pay for it, and a present
never failed to accompany a petition. After the authority of the sovereign, too,
was thoroughly established, the person found guilty, over and above the
satisfaction which he was obliged to make to the party, was likewise forced to
pay an amercement to the sovereign. He had given trouble, he had disturbed, he
had broke the peace of his lord the king, and for those offences an amercement
was thought due. In the Tartar governments of Asia, in the governments of Europe
which were founded by the German and Scythian nations who overturned the Roman
empire, the administration of justice was a considerable source of revenue, both
to the sovereign and to all the lesser chiefs or lords who exercised under him
any particular jurisdiction, either over some particular tribe or clan, or over
some particular territory or district. Originally both the sovereign and the
inferior chiefs used to exercise this jurisdiction in their own persons.
Afterwards they universally found it convenient to delegate it to some
substitute, bailiff, or judge. This substitute, however, was still obliged to
account to his principal or constituent for the profits of the jurisdiction.
Whoever reads the instructions which were given to the judges of the circuit in
the time of Henry II will see clearly that those judges were a sort of itinerant
factors, sent round the country for the purpose of levying certain branches of
the king's revenue. In those days the administration of justice not only
afforded a certain revenue to the sovereign, but to procure this revenue seems
to have been one of the principal advantages which he proposed to obtain by the
administration of justice.

This scheme of making the administration of justice subservient to the
purposes of revenue could scarce fail to be productive of several very gross
abuses. The person who applied for justice with a large present in his hand was
likely to get something more than justice; while he who applied for it with a
small one was likely to get something less. Justice, too, might frequently be
delayed in order that this present might be repeated. The amercement, besides,
of the person complained of, might frequently suggest a very strong reason for
finding him in the wrong, even when he had not really been so. That such abuses
were far from being uncommon the ancient history of every country in Europe
bears witness.

When the sovereign or chief exercised his judicial authority in his own
person, how much soever he might abuse it, it must have been scarce possible to
get any redress, because there could seldom be anybody powerful enough to call
him to account. When he exercised it by a bailiff, indeed, redress might
sometimes be had. If it was for his own benefit only that the bailiff had been
guilty of any act of injustice, the sovereign himself might not always be
unwilling to punish him, or to oblige him to repair the wrong. But if it was for
the benefit of his sovereign, if it was in order to make court to the person who
appointed him and who might prefer him, that he had committed any act of
oppression, redress would upon most occasions be as impossible as if the
sovereign had committed it himself. In all barbarous governments, accordingly,
in all those ancient governments of Europe in particular which were founded upon
the ruins of the Roman empire, the administration of justice appears for a long
time to have been extremely corrupt, far from being quite equal and impartial
even under the best monarchs, and altogether profligate under the worst.

Among nations of shepherds, where the sovereign or chief is only the
greatest shepherd or herdsman of the horde or clan, he is maintained in the same
manner as any of his vassals or subjects, by the increase of his own herds or
flocks. Among those nations of husbandmen who are but just come out of the
shepherd state, and who are not much advanced beyond that state, such as the
Greek tribes appear to have been about the time of the Trojan war, and our
German and Scythian ancestors when they first settled upon the ruins of the
western empire, the sovereign or chief is, in the same manner, only the greatest
landlord of the country, and is maintained, in the same manner as any other
landlord, by a revenue derived from his own private estate, or from what, in
modern Europe, was called the demesne of the crown. His subjects, upon ordinary
occasions, contributed nothing to his support, except when, in order to protect
them from the oppression of some of their fellow-subjects, they stand in need of
his authority. The presents which they make him upon such occasions constitute
the whole ordinary revenue, the whole of the emoluments which, except perhaps
upon some very extraordinary emergencies, he derives from his dominion over
them. When Agamemnon, in Homer, offers to Achilles for his friendship the
sovereignty of seven Greek cities, the sole advantage which he mentions as
likely to be derived from it was that the people would honour him with presents.
As long as such presents, as long as the emoluments of justice, or what may be
called the fees of court, constituted in this manner the whole ordinary revenue
which the sovereign derived from his sovereignty, it could not well be expected,
it could not even decently be proposed, that he should give them up altogether.
It might, and it frequently was proposed, that he should regulate and ascertain
them. But after they had been so regulated and ascertained, how to hinder a
person who was all-powerful from extending them beyond those regulations was
still very difficult, not to say impossible. During the continuance of this
state of things, therefore, the corruption of justice, naturally resulting from
the arbitrary and uncertain nature of those presents, scarce admitted of any
effectual remedy.

But when from different causes, chiefly from the continually increasing
expenses of defending the nation against the invasion of other nations, the
private estate of the sovereign had become altogether insufficient for defraying
the expense of the sovereignty, and when it had become necessary that the people
should, for their own security, contribute towards this expense by taxes of
different kinds, it seems to have been very commonly stipulated that no present
for the administration of justice should, under any pretence, be accepted either
by the sovereign, or by his bailiffs and substitutes, the judges. Those
presents, it seems to have been supposed, could more easily be abolished
altogether than effectually regulated and ascertained. Fixed salaries were
appointed to the judges, which were supposed to compensate to them the loss of
whatever might have been their share of the ancient emoluments of justice, as
the taxes more than compensated to the sovereign the loss of his. Justice was
then said to be administered gratis.

Justice, however, never was in reality administered gratis in any
country. Lawyers and attorneys, at least, must always be paid by the parties;
and, if they were not, they would perform their duty still worse than they
actually perform it. The fees annually paid to lawyers and attorneys amount, in
every court, to a much greater sum than the salaries of the judges. The
circumstance of those salaries being paid by the crown can nowhere much diminish
the necessary expense of a law-suit. But it was not so much to diminish the
expense, as to prevent the corruption of justice, that the judges were
prohibited from receiving any present or fee from the parties.

The office of judge is in itself so very honourable that men are willing
to accept of it, though accompanied with very small emoluments. The inferior
office of justice of peace, though attended with a good deal of trouble, and in
most cases with no emoluments at all, is an object of ambition to the greater
part of our country gentlemen. The salaries of all the different judges, high
and low, together with the whole expense of the administration and execution of
justice, even where it is not managed with very good economy, makes, in any
civilised country, but a very inconsiderable part of the whole expense of
government.

The whole expense of justice, too, might easily be defrayed by the fees
of court; and, without exposing the administration of justice to any real hazard
of corruption, the public revenue might thus be discharged from a certain,
though, perhaps, but a small incumbrance. It is difficult to regulate the fees
of court effectually where a person so powerful as the sovereign is to share in
them, and to derive any considerable part of his revenue from them. It is very
easy where the judge is the principal person who can reap any benefit from them.
The law can very easily oblige the judge to respect the regulation, though it
might not always be able to make the sovereign respect it. Where the fees of
court are precisely regulated and ascertained, where they are paid all at once,
at a certain period of every process, into the hands of a cashier or receiver,
to be by him distributed in certain known proportions among the different judges
after the process is decided, and not till it is decided, there seems to be no
more danger of corruption than where such fees are prohibited altogether. Those
fees, without occasioning any considerable increase in the expense of a lawsuit,
might be rendered fully sufficient for defraying the whole expense of justice.
By not being paid to the judges till the process was determined, they might be
some incitement to the diligence of the court in examining and deciding it. In
courts which consisted of a considerable number of judges, by proportioning the
share of each judge to the number of hours and days which he had employed in
examining the process, either in the court or in a committee by order of the
court, those fees might give some encouragement to the diligence of each
particular judge. Public services are never better performed than when their
reward comes only in consequence of their being performed, and is proportioned
to the diligence employed in performing them. In the different parliaments of
France, the fees of court (called epices and vacations) constitute the far
greater part of the emoluments of the judges. After all deductions are made, the
net salary paid by the crown to a counsellor or judge in the Parliament of
Toulouse, in rank and dignity the second parliament of the kingdom, amounts only
to a hundred and fifty livres, about six pounds eleven shillings sterling a
year. About seven years ago that sum was in the same place the ordinary yearly
wages of a common footman. The distribution of those epices, too, is according
to the diligence of the judges. A diligent judge gains a comfortable, though
moderate, revenue by his office: an idle one gets little more than his salary.
Those Parliaments are perhaps, in many respects, not very convenient courts of
justice; but they have never been accused, they seem never even to have been
suspected, of corruption.

The fees of court seem originally to have been the principal support of
the different courts of justice in England. Each court endeavoured to draw to
itself as much business as it could, and was, upon that account, willing to take
cognisance of many suits which were not originally intended to fall under its
jurisdiction. The Court of King's Bench, instituted for the trial of criminal
causes only, took cognisance of civil suits; the plaintiff pretending that the
defendant, in not doing him justice, had been guilty of some trespass or
misdemeanour. The Court of Exchequer, instituted for the levying of the king's
revenue, and for enforcing the payment of such debts only as were due to the
king, took cognisance of all other contract debts; the plaintiff alleging that
he could not pay the king because the defendant would not pay him. In
consequence of such fictions it came, in many cases, to depend altogether upon
the parties before what court they would choose to have their cause tried; and
each court endeavoured, by superior dispatch and impartiality, to draw to itself
as many causes as it could. The present admirable constitution of the courts of
justice in England was, perhaps, originally in a great measure formed by this
emulation which anciently took place between their respective judges; each judge
endeavouring to give, in his own court, the speediest and most effectual remedy
which the law would admit for every sort of injustice. Originally the courts of
law gave damages only for breach of contract. The Court of Chancery, as a court
of conscience, first took upon it to enforce the specific performance of
agreements. When the breach of contract consisted in the non-payment of money,
the damage sustained could be compensated in no other way than by ordering
payment, which was equivalent to a specific performance of the agreement. In
such cases, therefore, the remedy of the courts of law was sufficient. It was
not so in others. When the tenant sued his lord for having unjustly outed him of
his lease, the damages which he recovered were by no means equivalent to the
possession of the land. Such causes, therefore, for some time, went all to the
Court of Chancery, to the no small loss of the courts of law. It was to draw
back such causes to themselves that the courts of law are said to have invented
the artificial and fictitious Writ of Ejectment, the most effectual remedy for
an unjust outer or dispossession of land.

A stamp-duty upon the law proceedings of each particular court, to be
levied by that court, and applied towards the maintenance of the judges and
other officers belonging to it, might, in the same manner, afford revenue
sufficient for defraying the expense of the administration of justice, without
bringing any burden upon the general revenue of the society. The judges indeed
might, in this case, be under the temptation of multiplying unnecessarily the
proceedings upon every cause, in order to increase, as much as possible, the
produce of such a stamp-duty. It has been the custom in modern Europe to
regulate, upon most occasions, the payment of the attorneys and clerks of court
according to the number of pages which they had occasion to write; the court,
however, requiring that each page should contain so many lines, and each line so
many words. In order to increase their payment, the attorneys and clerks have
contrived to multiply words beyond all necessity, to the corruption of the law
language of, I believe, every court of justice in Europe. A like temptation
might perhaps occasion a like corruption in the form of law proceedings.

But whether the administration of justice be so contrived as to defray
its own expense, or whether the judges be maintained by fixed salaries paid to
them from some other fund, it does not seem necessary that the person or persons
entrusted with the executive power should be charged with the management of that
fund, or with the payment of those salaries. That fund might arise from the rent
of landed estates, the management of each estate being entrusted to the
particular court which was to be maintained by it. That fund might arise even
from the interest of a sum of money, the lending out of which might, in the same
manner, be entrusted to the court which was to be maintained by it. A part,
though indeed but a small part, of the salary of the judges of the Court of
Session in Scotland arises from the interest of a sum of money. The necessary
instability of such a fund seems, however, to render it an improper one for the
maintenance of an institution which ought to last for ever.

The separation of the judicial from the executive power seems originally
to have arisen from the increasing business of the society, in consequence of
its increasing improvement. The administration of justice became so laborious
and so complicated a duty as to require the undivided attention of the persons
to whom it was entrusted. The person entrusted with the executive power not
having leisure to attend to the decision of private causes himself, a deputy was
appointed to decide them in his stead. In the progress of the Roman greatness,
the consul was too much occupied with the political affairs of the state to
attend to the administration of justice. A praetor, therefore, was appointed to
administer it in his stead. In the progress of the European monarchies which
were founded upon the ruins of the Roman empire, the sovereigns and the great
lords came universally to consider the administration of justice as an office
both too laborious and too ignoble for them to execute in their own persons.
They universally, therefore, discharged themselves of it by appointing a deputy,
bailiff, or judge.

When the judicial is united to the executive power, it is scarce possible
that justice should not frequently be sacrificed to what is vulgarly called
polities. The persons entrusted with the great interests of the state may, even
without any corrupt views, sometimes imagine it necessary to sacrifice to those
interests the rights of a private man. But upon the impartial administration of
justice depends the liberty of every individual, the sense which he has of his
own security. In order to make every individual feel himself perfectly secure in
the possession of every right which belongs to him, it is not only necessary
that the judicial should be separated from the executive power, but that it
should be rendered as much as possible independent of that power. The judge
should not be liable to be removed from his office according to the caprice of
that power. The regular the good-will or even upon the good economy payment of
his salary should not depend upon of that power.

PART 3

Of the Expense of Public Works and Public Institutions

THE third and last duty of the sovereign or commonwealth is that
of erecting and maintaining those public institutions and those public
works, which, though they may be in the highest degree advantageous to a great
society, are, however, of such a nature that the profit could never repay the
expense to any individual or small number of individuals, and which it therefore
cannot be expected that any individual or small number of individuals should
erect or maintain. The performance of this duty requires, too, very different
degrees of expense in the different periods of society.

After the public institutions and public works necessary for the defence
of the society, and for the administration of justice, both of which have
already been mentioned, the other works and institutions of this kind are
chiefly those for facilitating the commerce of the society, and those for
promoting the instruction of the people. The institutions for instruction are of
two kinds: those for the education of youth, and those for the instruction of
people of all ages. The consideration of the manner in which the expense of
those different sorts of public, works and institutions may be most properly
defrayed will divide this third part of the present chapter into three different
articles.

ARTICLE 1

Of the Public
Works and Institutions for facilitating the Commerce of the Society And, first,
of those which are necessary for facilitating Commerce in general.

That the erection and maintenance of the public works which facilitate
the commerce of any country, such as good roads, bridges, navigable canals,
harbours, etc., must require very different degrees of expense in the different
periods of society is evident without any proof. The expense of making and
maintaining the public roads of any country must evidently increase with the
annual produce of the land and labour of that country, or with the quantity and
weight of the goods which it becomes necessary to fetch and carry upon those
roads. The strength of a bridge must be suited to the number and weight of the
carriages which are likely to pass over it. The depth and the supply of water
for a navigable canal must be proportioned to the number and tonnage of the
lighters which are likely to carry goods upon it; the extent of a harbour to the
number of the shipping which are likely to take shelter in it.

It does not seem necessary that the expense of those public works should
be defrayed from that public revenue, as it is commonly called, of which the
collection and application is in most countries assigned to the executive power.
The greater part of such public works may easily be so managed as to afford a
particular revenue sufficient for defraying their own expense, without bringing
any burden upon the general revenue of the society.

A highway, a bridge, a navigable canal, for example, may in most cases be
both made and maintained by a small toll upon the carriages which make use of
them: a harbour, by a moderate port-duty upon the tonnage of the shipping which
load or unload in it. The coinage, another institution for facilitating
commerce, in many countries, not only defrays its own expense, but affords a
small revenue or seignorage to the sovereign. The post-office, another
institution for the same purpose, over and above defraying its own expense,
affords in almost all countries a very considerable revenue to the sovereign.

When the carriages which pass over a highway or a bridge, and the
lighters which sail upon a navigable canal, pay toll in proportion to their
weight or their tonnage, they pay for the maintenance of those public works
exactly in proportion to the wear and tear which they occasion of them. It seems
scarce possible to invent a more equitable way of maintaining such works. This
tax or toll too, though it is advanced by the carrier, is finally paid by the
consumer, to whom it must always be charged in the price of the goods. As the
expense of carriage, however, is very much reduced by means of such public
works, the goods, notwithstanding the toll come cheaper to the consumer than
the; could otherwise have done; their price not being so much raised by the toll
as it is lowered by the cheapness of the carriage. The person who finally pays
this tax, therefore, gains by the application more than he loses by the payment
of it. His payment is exactly in proportion to his gain. It is in reality no
more than a part of that gain which he is obliged to give up in order to get the
rest. It seems impossible to imagine a more equitable method of raising a tax.

When the toll upon carriages of luxury upon coaches, post-chaises, etc.,
is made somewhat higher in proportion to their weight than upon carriages of
necessary use, such as carts, waggons, etc., the indolence and vanity of the
rich is made to contribute in a very easy manner to the relief of the poor, by
rendering cheaper the transportation of heavy goods to all the different parts
of the country.

When high roads, bridges, canals, etc., are in this manner made and
supported by the commerce which is carried on by means of them, they can be made
only where that commerce requires them, and consequently where it is proper to
make them. Their expenses too, their grandeur and magnificence, must be suited
to what that commerce can afford to pay. They must be made consequently as it is
proper to make them. A magnificent high road cannot be made through a desert
country where there is little or no commerce, or merely because it happens to
lead to the country villa of the intendant of the province, or to that of some
great lord to whom the intendant finds it convenient to make his court. A great
bridge cannot be thrown over a river at a place where nobody passes, or merely
to embellish the view from the windows of a neighbouring palace: things which
sometimes happen in countries where works of this kind are carried on by any
other revenue than that which they themselves are capable of affording.

In several different parts of Europe the ton or lock-duty upon a canal is
the property of private persons, whose private interest obliges them to keep up
the canal. If it is not kept in tolerable order, the navigation necessarily
ceases altogether, and along with it the whole profit which they can make by the
tolls. If those tolls were put under the management of commissioners, who had
themselves no interest in them, they might be less attentive to the maintenance
of the works which produced them. The canal of Languedoc cost the King of France
and the province upwards of thirteen millions of livres, which (at twenty-eight
livres the mark of silver, the value of French money in the end of the last
century) amounted to upwards of nine hundred thousand pounds sterling. When that
great work was finished, the most likely method, it was found, of keeping it in
constant repair was to make a present of the tolls to Riquet the engineer, who
planned and conducted the work. Those tolls constitute at present a very large
estate to the different branches of the family of that gentleman, who have,
therefore, a great interest to keep the work in constant repair. But had those
tolls been put under the management of commissioners, who had no such interest,
they might perhaps have been dissipated in ornamental and unnecessary expenses,
while the most essential parts of the work were allowed to go to ruin.

The tolls for the maintenance of a high road cannot with any safety be
made the property of private persons. A high road, though entirely neglected,
does not become altogether impassable, though a canal does. The proprietors of
the tolls upon a high road, therefore, might neglect altogether the repair of
the road, and yet continue to levy very nearly the same tolls. It is proper,
therefore, that the tolls for the maintenance of such a work should be put under
the management of commissioners or trustees.

In Great Britain, the abuses which the trustees have committed in the
management of those tolls have in many cases been very justly complained of. At
many turnpikes, it has been said, the money levied is more than double of what
is necessary for executing, in the completest manner, the work which is often
executed in very slovenly manner, and sometimes not executed at all. The system
of repairing the high roads by tolls of this kind, it must be observed, is not
of very long standing. We should not wonder, therefore, if it has not yet been
brought to that degree of perfection of which it seems capable. If mean and
improper persons are frequently appointed trustees, and if proper courts of
inspection and account have not yet been established for controlling their
conduct, and for reducing the tolls to what is barely sufficient for executing
the work to be done by them, the recency of the institution both accounts and
apologizes for those defects, of which, by the wisdom of Parliament, the greater
part may in due time be gradually remedied.

The money levied at the different turnpikes in Great Britain is supposed
to exceed so much what is necessary for repairing the roads, that the savings,
which, with proper economy, might be made from it, have been considered, even by
some ministers, as a very great resource which might at some time or another be
applied to the exigencies of the state. Government, it has been said, by taking
the management of the turnpikes into its own hands, and by employing the
soldiers, who would work for a very small addition to their pay, could keep the
roads in good order at a much less expense than it can be done by trustees, who
have no other workmen to employ but such as derive their whole subsistence from
their wages. A great revenue, half a million perhaps,* it has been pretended,
might in this manner be gained without laying any new burden upon the people;
and the turnpike roads might be made to contribute to the general expense of the
state, in the same manner as the post office does at present.
* Since publishing the two
first editions of this book, I have got good reasons to believe that all the
turnpike tolls levied in Great Britain do not produce a net revenue that amounts
to half a million; a sum which, under the management of Government, would not be
sufficient to keep in repair five of the principal roads in the kingdom.

That a considerable revenue might be gained in this manner I have no
doubt, though probably not near so much as the projectors of this plan have
supposed. The plan itself, however, seems liable to several very important
objections.

First, if the tolls which are levied at the turnpikes should ever be
considered as one of the resources for supplying the exigencies of the state,
they would certainly be augmented as those exigencies were supposed to require.
According to the policy of Great Britain, therefore, they would probably be
augmented very fast. The facility with which a great revenue could be drawn from
them would probably encourage administration to recur very frequently to this
resource. Though it may, perhaps, be more than doubtful whether half a million
could by any economy be saved out of the present tolls, it can scarce be doubted
but that a million might be saved out of them if they were doubled: and perhaps
two millions if they were tripled.* This great revenue, too, might be levied
without the appointment of a single new officer to collect and receive it. But
the turnpike tolls being continually augmented in this manner, instead of
facilitating the inland commerce of the country as at present, would soon become
a very great incumbrance upon it. The expense of transporting all heavy goods
from one part of the country to another would soon be so much increased, the
market for all such goods, consequently, would soon be so much narrowed, that
their production would be in a great measure discouraged, and the most important
branches of the domestic industry of the country annihilated altogether.
* I have now good reasons to
believe that all these conjectural sums are by much too large.

Secondly, a tax upon carriages in proportion to their weight, though a
very equal tax when applied to the sole purpose of repairing the roads, is a
very unequal one when applied to any other purpose, or to supply the common
exigencies of the state. When it is applied to the sole purpose above mentioned,
each carriage is supposed to pay exactly for the wear and tear which that
carriage occasions of the roads. But when it is applied to any other purpose,
each carriage is supposed to pay for more than that wear and tear, and
contributes to the supply of some other exigency of the state. But as the
turnpike toll raises the price of goods in proportion to their weight, and not
to their value, it is chiefly paid by the consumers of coarse and bulky, not by
those of precious and light, commodities. Whatever exigency of the state
therefore this tax might be intended to supply, that exigency would be chiefly
supplied at the expense of the poor, not the rich; at the expense of those who
are least able to supply it, not of those who are most able.

Thirdly, if government should at any time neglect the reparation of the
high roads, it would be still more difficult than it is at present to compel the
proper application of any part of the turnpike tolls. A large revenue might thus
be levied upon the people without any part of it being applied to the only
purpose to which a revenue levied in this manner ought ever to be applied. If
the meanness and poverty of the trustees of turnpike roads render it sometimes
difficult at present to oblige them to repair their wrong, their wealth and
greatness would render it ten times more so in the case which is here supposed.

In France, the funds destined for the reparation of high roads are under
the immediate direction of the executive power. Those funds consist partly in a
certain number of days' labour which the country people are in most parts of
Europe obliged to give to the reparation of the highways, and partly in such a
portion of the general revenue of the state as the king chooses to spare from
his other expenses.

By the ancient law of France, as well as by that of most other parts of
Europe, the labour of the country people was under the direction of a local or
provincial magistracy, which had no immediate dependency upon the king's
council. But by the present practice both the labour of the people, and whatever
other fund the king may choose to assign for the reparation of the high roads in
any particular province or generality, are entirely under the management of the
intendant; an officer who is appointed and removed by the king's council, and
who receives his orders from it, and is in constant correspondence with it. In
the progress of despotism the authority of the executive power gradually absorbs
that of every other power in the state, and assumes to itself the management of
every branch of revenue which is destined for any public purpose. In France,
however, the great post-roads, the roads which make the communication between
the principal towns of the kingdom, are in general kept in good order, and in
some provinces are even a good deal superior to the greater part of the turnpike
roads of England. But what we call the cross-roads, that is, the far greater
part of the roads in the country, are entirely neglected, and are in many places
absolutely impassable for any heavy carriage. In some places it is even
dangerous to travel on horseback, and mules are the only conveyances which can
safely be trusted. The proud minister of an ostentatious court may frequently
take pleasure in executing a work of splendour and magnificence, such as a great
highway, which is frequently seen by the principal nobility, whose applauses not
only flatter his vanity, but even contribute to support his interest at court.
But to execute a great number of little works, in which nothing that can be done
can make any great appearance, or excite the smallest degree of admiration in
any traveller, and which, in short, have nothing to recommend them but their
extreme utility, is a business which appears in every respect too mean and
paltry to merit the attention of so great a magistrate. Under such an
administration, therefore, such works are almost always entirely neglected.

In China, and in several other governments of Asia, the executive power
charges itself both with the reparation of the high roads and with the
maintenance of the navigable canals. In the instructions which are given to the
governor of each province, those objects, it is said, are constantly recommended
to him, and the judgment which the court forms of his conduct is very much
regulated by the attention which he appears to have paid to this part of his
instructions. This branch of public police accordingly is said to be very much
attended to in all those countries, but particularly in China, where the high
roads, and still more the navigable canals, it is pretended, exceed very much
everything of the same kind which is known in Europe. The accounts of those
works, however, which have been transmitted to Europe, have generally been drawn
up by weak and wondering travellers; frequently by stupid and lying
missionaries. If they had been examined by more intelligent eyes, and if the
accounts of them had been reported by more faithful witnesses, they would not,
perhaps, appear to be so wonderful. The account which Bernier gives of some
works of this kind in Indostan falls very much short of what had been reported
of them by other travellers, more disposed to the marvellous than he was. It may
too, perhaps, be in those countries, as in France, where the great roads, the
great communications which are likely to be the subjects of conversation at the
court and in the capital, are attended to, and all the rest neglected. In China,
besides, in Indostan, and in several other governments of Asia, the revenue of
the sovereign arises almost altogether from a land tax or land rent, which rises
or falls with the rise and fall of the annual produce of the land. The great
interest of the sovereign, therefore, his revenue, is in such countries
necessarily and immediately connected with the cultivation of the land, with the
greatness of its produce, and with the value of its produce. But in order to
render that produce both as great and as valuable as possible, it is necessary
to procure to it as extensive a market as possible, and consequently to
establish the freest, the easiest, and the least expensive communication between
all the different parts of the country; which can be done only by means of the
best roads and the best navigable canals. But the revenue of the sovereign does
not, in any part of Europe, arise chiefly from a land tax or land rent. In all
the great kingdoms of Europe, perhaps, the greater part of it may ultimately
depend upon the produce of the land: but that dependency is neither so
immediate, nor so evident. In Europe, therefore, the sovereign does not feel
himself so directly called upon to promote the increase, both in quantity and
value, of the produce of the land, or, by maintaining good roads and canals, to
provide the most extensive market for that produce. Though it should be true,
therefore, what I apprehend is not a little doubtful, that in some parts of Asia
this department of the public police is very properly managed by the executive
power, there is not the least probability that, during the present state of
things, it could be tolerably managed by that power in any part of Europe.

Even those public works which are of such a nature that they cannot
afford any revenue for maintaining themselves, but of which the conveniency is
nearly confined to some particular place or district, are always better
maintained by a local or provincial revenue, under the management of a local or
provincial administration, than by the general revenue of the state, of which
the executive power must always have the management. Were the streets of London
to be lighted and paved at the expense of the treasury, is there any probability
that they would be so well lighted and paved as they are at present, or even at
so small an expense? The expense, besides, instead of being raised by a local
tax upon the inhabitants of each particular street, parish, or district in
London, would, in this case, be defrayed out of the general revenue of the
state, and would consequently be raised by a tax upon all the inhabitants of the
kingdom, of whom the greater part derive no sort of benefit from the lighting
and paving of the streets of London.

The abuses which sometimes creep into the local and provincial
administration of a local and provincial revenue, how enormous soever they may
appear, are in reality, however, almost always very trifling in comparison of
those which commonly take place in the administration and expenditure of the
revenue of a great empire. They are, besides, much more easily corrected. Under
the local or provincial administration of the justices of the peace in Great
Britain, the six days' labour which the country people are obliged to give to
the reparation of the highways is not always perhaps very judiciously applied,
but it is scarce ever exacted with any circumstances of cruelty or oppression.
In France, under the administration of the intendants, the application is not
always more judicious, and the exaction is frequently the most cruel and
oppressive. Such Corvees, as they are called, make one of the principal
instruments of tyranny by which those officers chastise any parish or communaute
which has had the misfortune to fall under their displeasure.

Of the Public Works and Institutions which are necessary for facilitating particular
Branches of Commerce.

The object of the public works and institutions above mentioned is to
facilitate commerce in general. But in order to facilitate some particular
branches of it, particular institutions are necessary, which again require a
particular and extraordinary expense.

Some particular branches of commerce, which are carried on with barbarous
and uncivilised nations, require extraordinary protection. An ordinary store or
counting-house could give little security to the goods of the merchants who
trade to the western coast of Africa. To defend them from the barbarous natives,
it is necessary that the place where they are deposited should be, in some
measure, fortified. The disorders in the government of Indostan have been
supposed to render a like precaution necessary even among that mild and gentle
people; and it was under pretence of securing their persons and property from
violence that both the English and French East India Companies were allowed to
erect the first forts which they possessed in that country. Among other nations,
whose vigorous government will suffer no strangers to possess any fortified
place within their territory, it may be necessary to maintain some ambassador,
minister, or counsel, who may both decide, according to their own customs, the
differences arising among his own countrymen, and, in their disputes with the
natives, may, by means of his public character, interfere with more authority,
and afford them a more powerful protection, than they could expect from any
private man. The interests of commerce have frequently made it necessary to
maintain ministers in foreign countries where the purposes, either of war or
alliance, would not have required any. The commerce of the Turkey Company first
occasioned the establishment of an ordinary ambassador at Constantinople. The
first English embassies to Russia arose altogether from commercial interests.
The constant interference which those interests necessarily occasioned between
the subjects of the different states of Europe, has probably introduced the
custom of keeping, in all neighbouring countries, ambassadors or ministers
constantly resident even in the time of peace. This custom, unknown to ancient
times, seems not to be older than the end of the fifteenth or beginning of the
sixteenth century; that is, than the time when commerce first began to extend
itself to the greater part of the nations of Europe, and when they first began
to attend to its interests.

It seems not unreasonable that the extraordinary expense which the
protection of any particular branch of commerce may occasion should be defrayed
by a moderate tax upon that particular branch; by a moderate fine, for example,
to be paid by the traders when they first enter into it, or, what is more equal,
by a particular duty of so much per cent upon the goods which they either import
into, or export out of, the particular countries with which it is carried on.
The protection of trade in general, from pirates and freebooters, is said to
have given occasion to the first institution of the duties of customs. But, if
it was thought reasonable to lay a general tax upon trade, in order to defray
the expense of protecting trade in general, it should seem equally reasonable to
lay a particular tax upon a particular branch of trade, in order to defray the
extraordinary expense of protecting that branch.

The protection of trade in general has always been considered as
essential to the defence of the commonwealth, and, upon that account, a
necessary part of the duty of the executive power. The collection and
application of the general duties of customs, therefore, have always been left
to that power. But the protection of any particular branch of trade is a part of
the general protection of trade; a part, therefore, of the duty of that power;
and if nations always acted consistently, the particular duties levied for the
purposes of such particular protection should always have been left equally to
its disposal. But in this respect, as well as in many others, nations have not
always acted consistently; and in the greater part of the commercial states of
Europe, particular companies of merchants have had the address to persuade the
legislature to entrust to them the performance of this part of the duty of the
sovereign, together with all the powers which are necessarily connected with it.

These companies, though they may, perhaps, have been useful for the first
introduction of some branches of commerce, by making, at their own expense, an
experiment which the state might not think it prudent to make, have in the long
run proved, universally, either burdensome or useless, and have either
mismanaged or confined the trade.

When those companies do not trade upon a joint stock, but are obliged to
admit any person, properly qualified, upon paying a certain fine, and agreeing
to submit to the regulations of the company, each member trading upon his own
stock, and at his own risk, they are called regulated companies. When they trade
upon a joint stock, each member sharing in the common profit or loss in
proportion to his share in this stock, they are called joint stock companies.
Such companies, whether regulated or joint stock, sometimes have, and sometimes
have not, exclusive privileges.

Regulated companies resemble, in every respect, the corporations of
trades so common in the cities and towns of all the different countries of
Europe, and are a sort of enlarged monopolies of the same kind. As no inhabitant
of a town can exercise an incorporated trade without first obtaining his freedom
in the corporation, so in most cases no subject of the state can lawfully carry
on any branch of foreign trade, for which a regulated company is established,
without first becoming a member of that company. The monopoly is more or less
strict according as the terms of admission are more or less difficult; and
according as the directors of the company have more or less authority, or have
it more or less in their power to manage in such a manner as to confine the
greater part of the trade to themselves and their particular friends. In the
most ancient regulated companies the privileges of apprenticeship were the same
as in other corporations, and entitled the person who had served his time to a
member of the company to become himself a member, either without paying any
fine, or upon paying a much smaller one than what was exacted of other people.
The usual corporation spirit, wherever the law does not restrain it, prevails in
all regulated companies. When they have been allowed to act according to their
natural genius, they have always, in order to confine the competition to as
small a number of persons as possible, endeavoured to subject the trade to many
burden some regulations. When the law has restrained them from doing this, they
have become altogether useless and insignificant.

The regulated companies for foreign commerce which at present subsist in
Great Britain are the ancient merchant adventurers' company, now commonly called
the Hamburg Company, the Russia Company, the Eastland Company, the Turkey
Company, and the African Company.

The terms of admission into the Hamburg Company are now said to be quite
easy, and the directors either have it not their power to subject the trade to
any burdensome restraint or regulations, or, at least, have not of late
exercised that power. It has not always been so. About the middle of the last
century, the fine for admission was fifty, and at one time one hundred pounds,
and the conduct of the company was said to be extremely oppressive. In 1643, in
1645, and in 1661, the clothiers and free traders of the West of England
complained of them to Parliament as of monopolists who confined the trade and
oppressed the manufactures of the country. Though those complaints produced an
Act of Parliament, they had probably intimidated the company so far as to oblige
them to reform their conduct. Since that time, at least, there has been no
complaints against them. By the 10th and 11th of William III, c. 6, the fine for
admission into the Russia Company was reduced to five pounds; and by the 25th of
Charles II, c. 7, that for admission into the Eastland Company to forty
shillings, while, at the same time, Sweden, Denmark, and Norway, all the
countries on the north side of the Baltic, were exempted from their exclusive
charter. The conduct of those companies had probably given occasion to those two
Acts of Parliament. Before that time, Sir Josiah Child had represented both
these and the Hamburg Company as extremely oppressive, and imputed to their bad
management the low state of the trade which we at that time carried on to the
countries comprehended within their respective charters. But though such
companies may not, in the present times, be very oppressive, they are certainly
altogether useless. To be merely useless, indeed, is perhaps the highest eulogy
which can ever justly be bestowed upon a regulated company; and all the three
companies above mentioned seem, in their present state, to deserve this eulogy.

The fine for admission into the Turkey Company was formerly twenty-five
pounds for all persons under twenty-six years of age, and fifty pounds for all
persons above that age. Nobody but mere merchants could be admitted; a
restriction which excluded all shopkeepers and retailers. By a bye-law, no
British manufactures could be exported to Turkey but in the general ships of the
company; and as those ships sailed always from the port of London, this
restriction confined the trade to that expensive port, and the traders to those
who lived in London and in its neighbourhood. By another bye-law, no person
living within twenty miles of London, and not free of the city, could be
admitted a member; another restriction which, joined to the foregoing,
necessarily excluded all but the freemen of London. As the time for the loading
and sailing of those general ships depended altogether upon the directors, they
could easily fill them with their own goods and those of their particular
friends, to the exclusion of others, who, they might pretend, had made their
proposals too late. In this state of things, therefore, this company was in
every respect a strict and oppressive monopoly. Those abuses gave occasion to
the act of the 26th of George II, c. 18, reducing the fine for admission to
twenty pounds for all persons, without any distinction of ages, or any
restriction, either to mere merchants, or to the freemen of London; and granting
to all such persons the liberty of exporting, from all the ports of Great
Britain to any port in Turkey, all British goods of which the exportation was
not prohibited; and of importing from thence all Turkish goods of which the
importation was not prohibited, upon paying both the general duties of customs,
and the particular duties assessed for defraying the necessary expenses of the
company; and submitting, at the same time, to the lawful authority of the
British ambassador and consuls resident in Turkey, and to the bye laws of the
company duly enacted. To prevent any oppression by those bye-laws, it was by the
same act ordained, that if any seven members of the company conceived themselves
aggrieved by any bye-law which should be enacted after the passing of this act,
they might appeal to the Board of Trade and Plantations (to the authority of
which a committee of the Privy Council has now succeeded), provided such appeal
was brought within twelve months after the bye-law was enacted; and that if any
seven members conceived themselves aggrieved by any bye-law which had been
enacted before the passing of this act, they might bring a like appeal, provided
it was within twelve months after the day on which this act was to take place.
The experience of one year, however, may not always be sufficient to discover to
all the members of a great company, the pernicious tendency of a particular
bye-law; and if several of them should afterwards discover it, neither the Board
of Trade, nor the committee of council, can afford them any redress. The object,
besides, of the greater part of the bye-laws of all regulated companies, as well
as of all other corporations, is not so much to oppress those who are already
members, as to discourage others from becoming so; which may be done, not only
by a high fine, but by many other contrivances. The constant view of such
companies is always to raise the rate of their own profit as high as they can;
to keep the market, both for the goods which they export, and for those which
they import, as much understocked as they can: which can be done only by
restraining the competition, or by discouraging new adventurers from entering
into the trade. A fine even of twenty pounds, besides, though it may not perhaps
be sufficient to discourage any man from entering into the Turkey trade with an
intention to continue in it, may be enough to discourage a speculative merchant
from hazarding a single adventure in it. In all trades, the regular established
traders, even though not incorporated, naturally combine to raise profits, which
are noway so likely to be kept, at all times, down to their proper level, as by
the occasional competition of speculative adventure. The Turkey trade, though in
some measure laid open by this Act of Parliament, is still considered by many
people as very far from being altogether free. The Turkey Company contribute to
maintain an ambassador and two or three consuls, who, like other public
ministers, ought to be maintained altogether by the state, and the trade laid
open to all his Majesty's subjects. The different taxes levied by the company,
for this and other corporation purposes, might afford avenue much more than
sufficient to enable the state to maintain such ministers.

Regulated companies, it was observed by Sir Josiah Child, though they had
frequently supported public ministers, had never maintained any forts or
garrisons in the countries to which they traded; whereas joint stock companies
frequently had. And in reality the former seem to be much more unfit for this
sort of service than the latter. First, the directors of a regulated company
have no particular interest in the prosperity of the general trade of the
company for the sake of which such forts and garrisons are maintained. The decay
of that general trade may even frequently contribute to the advantage of their
own private trade; as by diminishing the number of their competitors it may
enable them both to buy cheaper, and to sell dearer. The directors of a joint
stock company, on the contrary, having only their share in the profits which are
made upon the common stock committed to their management, have no private trade
of their own of which the interest can be separated from that of the general
trade of the company. Their private interest is connected with the prosperity of
the general trade of the company, and with the maintenance of the forts and
garrisons which are necessary for its defence. They are more likely, therefore,
to have that continual and careful attention which that maintenance necessarily
requires. Secondly, the directors of a joint stock company have always the
management of a large capital, the joint stock of the company, a part of which
they may frequently employ, with propriety, in building, repairing, and
maintaining such necessary forts and garrisons. But the directors of a regulated
company, having the management of no common capital, have no other fund to
employ in this way but the casual revenue arising from the admission fines, and
from the corporation duties imposed upon the trade of the company. Though they
had the same interest, therefore, to attend to the maintenance of such forts and
garrisons, they can seldom have the same ability to render that attention
effectual. The maintenance of a public minister requiring scarce any attention,
and but a moderate and limited expense, is a business much more suitable both to
the temper and abilities of a regulated company.

Long after the time of Sir Josiah Child, however, in 1750, a regulated
company was established, the present company of merchants trading to Africa,
which was expressly charged at first with the maintenance of all the British
forts and garrisons that lie between Cape Blanc and the Cape of Good Hope, and
afterwards with that of those only which lie between Cape Rouge and the Cape of
Good Hope. The act which establishes this company (the 23rd of George II, c. 3)
seems to have had two distinct objects in view; first, to restrain effectually
the oppressive and monopolizing spirit which is natural to the directors of a
regulated company; and secondly, to force them, as much as possible, to give an
attention, which is not natural to them, towards the maintenance of forts and
garrisons.

For the first of these purposes the fine for admission is limited to
forty shillings. The company is prohibited from trading in their corporate
capacity, or upon a joint stock; from borrowing money upon common seal, or from
laying any restraints upon the trade which may be carried on freely from all
places, and by all persons being British subjects, and paying the fine. The
government is in a committee of nine persons who meet at London, but who are
chosen annually by the freemen of the company at London, Bristol, and Liverpool;
three from each place. No committee-man can be continued in office for more than
three years together. Any committee-man might be removed by the Board of Trade
and Plantations, now by a committee council, after being heard in his own
defence. The committee are forbid to export negroes from Africa, or to import
any African goods into Great Britain. But as they are charged with the
maintenance of forts and garrisons, they may, for that purpose, export from
Great Britain to Africa goods and stores of different kinds. Out of the monies
which they shall receive from the company, they are allowed a sum not exceeding
eight hundred pounds for the salaries of their clerks and agents at London,
Bristol, and Liverpool, the house rent of their office at London, and all other
expenses of management, commission, and agency in England. What remains of this
sum, after defraying these different expenses, they may divide among themselves,
as compensation for their trouble, in what manner they think proper. By this
constitution, it might have been expected that the spirit of monopoly would have
been effectually restrained, and the first of these purposes sufficiently
answered. It would seem, however, that it had not. Though by the 4th of George
III, c. 20, the fort of Senegal, with all its dependencies, had been vested in
the company of merchants trading to Africa, yet in the year following (by the
5th of George III, c. 44) not only Senegal and its dependencies, but the whole
coast from the port of Sallee, in south Barbary, to Cape Rouge, was exempted
from the jurisdiction of that company, was vested in the crown, and the trade to
it declared free to all his Majesty's subjects. The company had been suspected
of restraining the trade, and of establishing some sort of improper monopoly. It
is not, however, very easy to conceive how, under the regulations of the 23rd of
George II, they could do so. In the printed debates of the House of Commons, not
always the most authentic records of truth, I observe, however, that they have
been accused of this. The members of the committee of nine, being all merchants,
and the governors and factors, in their different forts and settlements, being
all dependent upon them, it is not unlikely that the latter might have given
peculiar attention to the consignments and commissions of the former which would
establish a real monopoly.

For the second of these, purposes, the maintenance of the forts and
garrisons, an annual sum has been allotted to them by Parliament, generally
about L13,000. For the proper application of this sum, the committee is obliged
to account annually to the Cursitor Baron of Exchequer; which account is
afterwards to be laid before Parliament. But Parliament, which gives so little
attention to the application of millions, is not likely to give much to that of
L13,000 a year; and the Cursitor Baron of Exchequer, from his profession and
education, is not likely to be profoundly skilled in the proper expense of forts
and garrisons. The captains of his Majesty's navy, indeed, or any other
commissioned officers appointed by the Board of Admiralty, may inquire into the
condition of the forts and garrisons, and report their observations to that
board. But that board seems to have no direct jurisdiction over the committee,
nor any authority to correct those whose conduct it may thus inquire into; and
the captains of his Majesty's navy, besides, are not supposed to be always
deeply learned in the science of fortification. Removal from an office which can
be enjoyed only for the term of three years, and of which the lawful emoluments,
even during that term, are so very small, seems to be the utmost punishment to
which any committee-man is liable for any fault, except direct malversation, or
embezzlement, either of the public money, or of that of the company; and the
fear of that punishment can never be a motive of sufficient weight to force a
continual and careful attention to a business to which he has no other interest
to attend. The committee are accused of having sent out bricks and stones from
England for the reparation of Cape Coast Castle on the coast of Guinea, a
business for which Parliament had several times granted an extraordinary sum of
money. These bricks and stones too, which had thus been sent upon so long a
voyage, were said to have been of so bad a quality that it was necessary to
rebuild from the foundation the walls which had been repaired with them. The
forts and garrisons which lie north of Cape Rouge are not only maintained at the
expense of the state, but are under the immediate government of the executive
power; and why those which lie south of that Cape, and which are, in part at
least, maintained at the expense of the state, should be under a different
government, it seems not very easy even to imagine a good reason. The protection
of the Mediterranean trade was the original purpose of pretence of the garrisons
of Gibraltar and Minorca, and the maintenance and government of those garrisons
has always been, very properly, committed, not to the Turkey Company, but to the
executive power. In the extent of its dominion consists, in a great measure, the
pride and dignity of that power; and it is not very likely to fail in attention
to what is necessary for the defence of that dominion. The garrisons at
Gibraltar and Minorca, accordingly, have never been neglected; though Minorca
has been twice taken, and is now probably lost for ever, that disaster was never
even imputed to any neglect in the executive power. I would not, however, be
understood to insinuate that either of those expensive garrisons was ever, even
in the smallest degree, necessary for the purpose for which they were originally
dismembered from the Spanish monarchy. That dismemberment, perhaps, never served
any other real purpose than to alienate from England her natural ally the King
of Spain, and to unite the two principal branches of the house of Bourbon in a
much stricter and more permanent alliance than the ties of blood could ever have
united them.

Joint stock companies, established by Royal Charter or by Act of
Parliament, differ in several respects, not only from regulated companies, but
from private copartneries.

First, in a private copartnery, no partner, without the consent of the
company, can transfer his share to another person, or introduce a new member
into the company. Each member, however, may, upon proper warning, withdraw from
the copartnery, and demand payment from them of his share of the common stock.
In a joint stock company, on the contrary, no member can demand payment of his
share from the company; but each member can, without their consent, transfer his
share to another person, and thereby introduce a new member. The value of a
share in a joint stock is always the price which it will bring in the market;
and this may be either greater or less, in any proportion, than the sum which
its owner stands credited for in the stock of the company.

Secondly, in a private copartnery, each partner is bound for the debts
contracted by the company to the whole extent of his fortune. In a joint stock
company, on the contrary, each partner is bound only to the extent of his share.

The trade of a joint stock company is always managed by a court of
directors. This court, indeed, is frequently subject, in many respects, to the
control of a general court of proprietors. But the greater part of those
proprietors seldom pretend to understand anything of the business of the
company, and when the spirit of faction happens not to prevail among them, give
themselves no trouble about it, but receive contentedly such half-yearly or
yearly dividend as the directors think proper to make to them. This total
exemption from trouble and from risk, beyond a limited sum, encourages many
people to become adventurers in joint stock companies, who would, upon no
account, hazard their fortunes in any private copartnery. Such companies,
therefore, commonly draw to themselves much greater stocks than any private
copartnery can boast of. The trading stock of the South Sea Company, at one
time, amounted to upwards of thirty-three millions eight hundred thousand
pounds. The divided capital of the Bank of England amounts, at present, to ten
millions seven hundred and eighty thousand pounds. The directors of such
companies, however, being the managers rather of other people's money than of
their own, it cannot well be expected that they should watch over it with the
same anxious vigilance with which the partners in a private copartnery
frequently watch over their own. Like the stewards of a rich man, they are apt
to consider attention to small matters as not for their master's honour, and
very easily give themselves a dispensation from having it. Negligence and
profusion, therefore, must always prevail, more or less, in the management of
the affairs of such a company. It is upon this account that joint stock
companies for foreign trade have seldom been able to maintain the competition
against private adventurers. They have, accordingly, very seldom succeeded
without an exclusive privilege, and frequently have not succeeded with one.
Without an exclusive privilege they have commonly mismanaged the trade. With an
exclusive privilege they have both mismanaged and confined it.

The Royal African Company, the predecessors of the present African
Company, had an exclusive privilege by charter, but as that charter had not been
confirmed by Act of Parliament, the trade, in consequence of the Declaration of
Rights, was, soon after the revolution, laid open to all his Majesty's subjects.
The Hudson's Bay Company are, as to their legal rights, in the same situation as
the Royal African Company. Their exclusive charter has not been confirmed by Act
of Parliament. The South Sea Company, as long as they continued to be a trading
company, had an exclusive privilege confirmed by Act of Parliament; as have
likewise the present United Company of Merchants trading to the East Indies.

The Royal African Company soon found that they could not maintain the
competition against private adventurers, whom, notwithstanding the Declaration
of Rights, they continued for some time to call interlopers, and to persecute as
such. In 1698, however, the private adventurers were subjected to a duty of ten
per cent upon almost all the different branches of their trade, to be employed
by the company in the maintenance of their forts and garrisons But,
notwithstanding this heavy tax, the company were still unable to maintain the
competition. Their stock and credit gradually declined. In 1712, their debts had
become so great that a particular Act of Parliament was thought necessary, both
for their security and for that of their creditors. It was enacted that the
resolution of two-thirds of these creditors in number and value should bind the
rest, both with regard to the time which should be allowed to the company for
the payment of their debts, and with regard to any other agreement which it
might be thought proper to make with them concerning those debts. In 1730, their
affairs were in so great disorder that they were altogether incapable of
maintaining their forts and garrisons, the sole purpose and pretext of their
institution. From that year, till their final dissolution, the Parliament judged
it necessary to allow the annual sum of ten thousand pounds for that purpose. In
1732, after having been for many years losers by the trade of carrying negroes
to the West Indies, they at last resolved to give it up altogether; to sell to
the private traders to America the negroes which they purchased upon the coast;
and to employ their servants in a trade to the inland parts of Africa for gold
dust, elephants' teeth, dyeing drugs, etc. But their success in this more
confined trade was not greater than in their former extensive one. Their affairs
continued to go gradually to decline, till at last, being in every respect a
bankrupt company, they were dissolved by Act of Parliament, and their forts and
garrisons vested in the present regulated company of merchants trading to
Africa. Before the erection of the Royal African Company, there had been three
other joint stock companies successively established, one after another, for the
African trade. They were all equally unsuccessful. They all, however, had
exclusive charters, which, though not confirmed by Act of Parliament, were in
those days supposed to convey a real exclusive privilege.

The Hudson's Bay Company, before their misfortunes in the late war, had
been much more fortunate than the Royal African Company. Their necessary expense
is much smaller. The whole number of people whom they maintain in their
different settlements and habitations, which they have honoured with the name of
forts, is said not to exceed a hundred and twenty persons. This number, however,
is sufficient to prepare beforehand the cargo of furs and other goods necessary
for loading their ships, which, on account of the ice, can seldom remain above
six or eight weeks in those seas. This advantage of having a cargo ready
prepared could not for several years be acquired by private adventurers, and
without it there seems to be no possibility of trading to Hudson's Bay. The
moderate capital of the company, which, it is said, does not exceed one hundred
and ten thousand pounds, may besides be sufficient to enable them to engross the
whole, or almost the whole, trade and surplus produce of the miserable, though
extensive country, comprehended within their charter. No private adventurers,
accordingly, have ever attempted to trade to that country in competition with
them. This company, therefore, have always enjoyed an exclusive trade in fact,
though they may have no right to it in law. Over and above all this, the
moderate capital of this company is said to be divided among a very small number
of proprietors. But a joint stock company, consisting of a small number of
proprietors, with a moderate capital, approaches very nearly to the nature of a
private copartnery, and may be capable of nearly the same degree of vigilance
and attention. It is not to be wondered at, therefore, if, in consequence of
these different advantages, the Hudson's Bay Company had, before the late war,
been able to carry on their trade with a considerable degree of success. It does
not seem probable, however, that their profits ever approached to what the late
Mr. Dobbs imagined them. A much more sober and judicious writer, Mr. Anderson,
author of The Historical and Chronological Deduction of Commerce, very justly
observes that, upon examining the accounts of which Mr. Dobbs himself was given
for several years together of their exports and imports, and upon making proper
allowances for their extraordinary risk and expense, it does not appear that
their profits deserve to be envied, or that they can much, if at all, exceed the
ordinary profits of trade.

The South Sea Company never had any forts or garrisons to maintain, and
therefore were entirely exempted from one great expense to which other joint
stock companies for foreign trade are subject. But they had an immense capital
divided among an immense number of proprietors. It was naturally to be expected,
therefore, that folly, negligence, and profusion should prevail in the whole
management of their affairs. The knavery and extravagance of their stock-jobbing
projects are sufficiently known, and the explication of them would be foreign to
the present subject. Their mercantile projects were not much better conducted.
The first trade which they engaged in was that of supplying the Spanish West
Indies with negroes, of which (in consequence of what was called the Assiento
contract granted them by the Treaty of Utrecht) they had the exclusive
privilege. But as it was not expected that much profit could be made by this
trade, both the Portuguese and French companies, who had enjoyed it upon the
same terms before them, having been ruined by it, they were allowed, as
compensation, to send annually a ship of a certain burden to trade directly to
the Spanish West Indies. Of the ten voyages which this annual ship was allowed
to make, they are said to have gained considerably by one, that of the Royal
Caroline in 1731, and to have been losers, more or less, by almost all the rest.
Their ill success was imputed, by their factors and agents, to the extortion and
oppression of the Spanish government; but was, perhaps, principally owing to the
profusion and depredations of those very factors and agents, some of whom are
said to have acquired great fortunes even in one year. In 1734, the company
petitioned the king that they might be allowed to dispose of the trade and
tonnage of their annual ship, on account of the little profit which they made by
it, and to accept such equivalent as they could obtain from the of Spain.

In 1724, this company had undertaken the whale-fishery. Of this, indeed,
they had no monopoly; but as long as they carried it on, no other British
subjects appear to have engaged in it. Of the eight voyages which their ships
made to Greenland, they were gainers by one, and losers by all the rest. After
their eighth and last voyage, when they had sold their ships, stores, and
utensils, they found that their whole loss, upon this branch, capital and
interest included, amounted to upwards of two hundred and thirty-seven thousand
pounds.

In 1722, this company petitioned the Parliament to be allowed to divide
their immense capital of more than thirty-three millions eight hundred thousand
pounds, the whole of which had been lent to government, into two equal parts:
The one half, or upwards of sixteen millions nine hundred thousand pounds, to be
put upon the same footing with other government annuities, and not to be subject
to the debts contracted, or losses incurred, by the directors of the company in
the prosecution of their mercantile projects; the other half to remain, as
before, a trading stock, and to be subject to those debts and losses. The
petition was too reasonable not to be granted. In 1733, they again petitioned
the Parliament that three-fourths of their trading stock might be turned into
annuity stock, and only one-fourth remain as trading stock, or exposed to the
hazards arising from the bad management of their directors. Both their annuity
and trading stocks had, by this time, been reduced more than two millions each
by several different payments from government; so that this fourth amounted only
to L3,662,784 8s. 6d. In 1748, all the demands of the company upon the King of
Spain, in consequence of the Assiento contract, were, by the Treaty of
Aix-la-Chapelle, given up for what was supposed an equivalent. An end was put to
their trade with the Spanish West Indies, the remainder of their trading stock
was turned into an annuity stock, and the company ceased in every respect to be
a trading company.

It ought to be observed that in the trade which the South Sea Company
carried on by means of their annual ship, the only trade by which it ever was
expected that they could make any considerable profit, they were not without
competitors, either in the foreign or in the home market. At Carthagena, Porto
Bello, and La Vera Cruz, they had to encounter the competition of the Spanish
merchants, who brought from Cadiz, to those markets, European goods of the same
kind with the outward cargo of their ship; and in England they had to encounter
that of the English merchants, who imported from Cadiz goods of the Spanish West
Indies of the same kind with the inward cargo. The goods both of the Spanish and
English merchants, indeed, were, perhaps, subject to higher duties. But the loss
occasioned by the negligence, profusion, and malversation of the servants of the
company had probably been a tax much heavier than all those duties. That a joint
stock company should be able to carry on successfully any branch of foreign
trade, when private adventurers can come into any sort of open and fair
competition with them, seems contrary to all experience.

The old English East India Company was established in 1600 by a charter
from Queen Elizabeth. In the first twelve voyages which they fitted out for
India, they appear to have traded as a regulated company, with separate stocks,
though only in the general ships of the company. In 1612, they united into a
joint stock. Their charter was exclusive, and though not confirmed by Act of
Parliament, was in those days supposed to convey a real exclusive privilege. For
many years, therefore, they were not much disturbed by interlopers. Their
capital, which never exceeded seven hundred and forty-four thousand pounds, and
of which fifty pounds was a share, was not so exorbitant, nor their dealings so
extensive, as to afford either a pretext for gross negligence and profusion, or
a cover to gross malversation. Notwithstanding some extraordinary losses,
occasioned partly by the malice of the Dutch East India Company, and partly by
other accidents, they carried on for many years a successful trade. But in
process of time, when the principles of liberty were better understood, it
became every day more and more doubtful how far a Royal Charter, not confirmed
by Act of Parliament, could convey an exclusive privilege. Upon this question
the decisions of the courts of justice were not uniform, but varied with the
authority of government and the humours of the times. Interlopers multiplied
upon them, and towards the end of the reign of Charles II, through the whole of
that of James II and during a part of that of William III, reduced them to great
distress. In 1698, a proposal was made to Parliament of advancing two millions
to government at eight per cent, provided the subscribers were erected into a
new East India Company with exclusive privileges. The old East India Company
offered seven hundred thousand pounds, nearly the amount of their capital, at
four per cent upon the same conditions. But such was at that time the state of
public credit, that it was more convenient for government to borrow two millions
at eight per cent than seven hundred thousand pounds at four. The proposal of
the new subscribers was accepted, and a new East India Company established in
consequence. The old East India Company, however, had a right to continue their
trade till 1701. They had, at the same time, in the name of their treasurer,
subscribed, very artfully, three hundred and fifteen thousand pounds into the
stock of the new. By a negligence in the expression of the Act of Parliament
which vested the East India trade in the subscribers to this loan of two
millions, it did not appear evident that they were all obliged to unite into a
joint stock. A few private traders, whose subscriptions amounted only to seven
thousand two hundred pounds, insisted upon the privilege of trading separately
upon their own stocks and at their own risk. The old East India Company had a
right to a separate trade upon their old stock till 1701; and they had likewise,
both before and after that period, a right, like that of other private traders,
to a separate trade upon the three hundred and fifteen thousand pounds which
they had subscribed into the stock of the new company. The competition of the
two companies with the private traders, and with one another, is said to have
well-nigh ruined both. Upon a subsequent occasion, in 1730, when a proposal was
made to Parliament for putting the trade under the management of a regulated
company, and thereby laying it in some measure open, the East India Company, in
opposition to this proposal, represented in very strong terms what had been, at
this time, the miserable effects, as they thought them, of this competition. In
India, they said, it raised the price of goods so high that they were not worth
the buying; and in England, by overstocking the market, it sunk their price so
low that no profit could be made by them. That by a more plentiful supply, to
the great advantage and conveniency of the public, it must have reduced, very
much, the price of Indian goods in the English market, cannot well be doubted;
but that it should have raised very much their price in the Indian market seems
not very probable, as all the extraordinary demand which that competition could
occasion must have been but as a drop of water in the immense ocean of Indian
Commerce. The increase of demand, besides, though in the beginning it may
sometimes raise the price of goods, never fails to lower it in the run. It
encourages production, and thereby increases the competition of the producers,
who, in order to undersell one another, have recourse to new divisions of labour
and new improvements of art which might never otherwise have been thought of.
The miserable effects of which the company complained were the cheapness of
consumption and the encouragement given to production, precisely the two effects
which it is the great business of political economy to promote. The competition,
however, of which they gave this doleful account, had not been allowed to be of
long continuance. In 1702, the two companies were, in some measure, united by an
indenture tripartite, to which the queen was the third party; and in 1708, they
were, by Act of Parliament, perfectly consolidated into one company by their
present name of the The United Company of Merchants trading to the East Indies.
Into this act it was thought worth while to insert a clause allowing the
separate traders to continue their trade till Michaelmas 1711, but at the same
time empowering the directors, upon three years' notice, to redeem their little
capital of seven thousand two hundred pounds, and thereby to convert the whole
stock of the company into a joint stock. By the same act, the capital of the
company, in consequence of a new loan to government, was augmented from two
millions to three millions two hundred thousand pounds. In 1743, the company
advanced another million to government. But this million being raised, not by a
call upon the proprietors, but by selling annuities and contracting bond-debts,
it did not augment the stock upon which the proprietors could claim a dividend.
It augmented, however, their trading stock, it being equally liable with the
other three millions two hundred thousand pounds to the losses sustained, and
debts contracted, by the company in prosecution of their mercantile projects.
From 1708, or at least from 1711, this company, being delivered from all
competitors, and fully established in the monopoly of the English commerce to
the East Indies, carried on a successful trade, and from their profits made
annually a moderate dividend to their proprietors. During the French war, which
began in 1741, the ambition of Mr. Dupleix, the French governor of Pondicherry,
involved them in the wars of the Carnatic, and in the politics of the Indian
princes. After many signal successes, and equally signal losses, they at last
lost Madras, at that time their principal settlement in India. It was restored
to them by the Treaty of Aix-la-Chapelle; and about this time the spirit of war
and conquest seems to have taken possession of their servants in India, and
never since to have left them. During the French war, which began in 1755, their
arms partook of the general good fortune of those of Great Britain. They
defended Madras, took Pondicherry, recovered Calcutta, and acquired the revenues
of a rich and extensive territory, amounting, it was then said, to upwards of
three millions a year. They remained for several years in quiet possession of
this revenue: but in 1767, administration laid claim to their territorial
acquisitions, and the revenue arising from them, as of right belonging to the
crown; and the company, in compensation for this claim, agreed to pay the
government four hundred thousand pounds a year. They had before this gradually
augmented their dividend from about six to ten per cent; that is, upon their
capital of three millions two hundred thousand pounds they had increased it by a
hundred and twenty-eight thousand pounds, or had raised it from one hundred and
ninety-two thousand to three hundred and twenty thousand pounds a year. They
were attempting about this time to raise it still further, to twelve and a half
per cent, which would have made their annual payments to their proprietors equal
to what they had agreed to pay annually to government, or to four hundred
thousand pounds a year.

But during the two years in which their agreement with government was to
take place, they were restrained from any further increase of dividend by two
successive Acts of Parliament, of which the object was to enable them to make a
speedier progress in the payment of their debts, which were at this time
estimated at upwards of six or seven millions sterling. In 1769, they renewed
their agreement with government for five years more, and stipulated that during
the course of that period they should be allowed gradually to increase their
dividend to twelve and a half per cent; never increasing it, however, more than
one per cent in one year. This increase of dividend, therefore, when it had
risen to its utmost height, could augment their annual payments, to their
proprietors and government together, but by six hundred and eight thousand
pounds beyond what they had been before their late territorial acquisitions.
What the gross revenue of those territorial acquisitions was supposed to amount
to has already been mentioned; and by an account brought by the Cruttenden East
Indiaman in 1768, the net revenue, clear of all deductions and military charges,
was stated at two millions forty-eight thousand seven hundred and forty-seven
pounds. They were said at the same time to possess another revenue, arising
partly from lands, but chiefly from the customs established at their different
settlements, amounting to four hundred and thirty-nine thousand pounds. The
profits of their trade too, according to the evidence of their chairman before
the House of Commons, amounted at this time to at least four hundred thousand
pounds a year, according to that of their accountant, to at least five hundred
thousand; according to the lowest account, at least equal to the highest
dividend that was to be paid to their proprietors. So great a revenue might
certainly have afforded an augmentation of six hundred and eight thousand pounds
in their annual payments, and at the same time have left a large sinking fund
sufficient for the speedy reduction of their debts. In 1773, however, their
debts, instead of being reduced, were augmented by an arrear to the treasury in
the payment of the four hundred thousand pounds, by another to the custom-house
for duties unpaid, by a large debt to the bank for money borrowed, and by a
fourth for bills drawn upon them from India, and wantonly accepted, to the
amount of upwards of twelve hundred thousand pounds. The distress which these
accumulated claims brought upon them, obliged them not only to reduce all at
once their dividend to six per cent, but to throw themselves upon the mercy of
government, and to supplicate, first, a release from further payment of the
stipulated four hundred thousand pounds a year; and, secondly, a loan of
fourteen hundred thousand, to save them from immediate bankruptcy. The great
increase of their fortune had, it seems, only served to furnish their servants
with a pretext for greater profusion, and a cover for greater malversation, than
in proportion even to that increase of fortune. The conduct of their servants in
India, and the general state of their affairs both in India and in Europe,
became the subject of a Parliamentary inquiry, in consequence of which several
very important alternations were made in the constitution of their government,
both at home and abroad. In India their principal settlements of Madras, Bombay,
and Calcutta, which had before been altogether independent of one another, were
subjected to a governor-general, assisted by a council of four assessors,
Parliament assuming to itself the first nomination of this governor and council
who were to reside at Calcutta; that city having now become, what Madras was
before, the most important of the English settlements in India. The Court of the
Mayor of Calcutta, originally instituted for the trial of mercantile causes
which arose in city and neighbourhood, had gradually extended its jurisdiction
with the extension of the empire. It was now reduced and confined to the
original purpose of its institution. Instead of it a new supreme court of
judicature was established, consisting of a chief justice and three judges to be
appointed by the crown. In Europe, the qualification necessary to entitle a
proprietor to vote at their general courts was raised from five hundred pounds,
the original price of a share in the stock of the company, to a thousand pounds.
In order to vote upon this qualification too, it was declared necessary that he
should have possessed it, if acquired by his own purchase, and not by
inheritance, for at least one year, instead of six months, the term requisite
before. The court of twenty-four directors had before been chosen annually; but
it was now enacted that each director should, for the future, be chosen for four
years; six of them, however, to go out of office by rotation every year, and not
to be capable of being re-chosen at the election of the six new directors for
the ensuing year. In consequence of these alterations, the courts, both of the
proprietors and directors, it was expected, would be likely to act with more
dignity and steadiness than they had usually done before. But it seems
impossible, by any alterations, to render those courts, in any respect, fit to
govern, or even to share in the government of a great empire; because the
greater part of their members must always have too little interest in the
prosperity of that empire to give any serious attention to what may promote it.
Frequently a man of great, sometimes even a man of small fortune, is willing to
purchase a thousand pounds' share in India stock merely for the influence which
he expects to acquire by a vote in the court of proprietors. It gives him a
share, though not in the plunder, yet in the appointment of the plunderers of
India; the court of directors, though they make that appointment, being
necessarily more or less under the influence of the proprietors, who not only
elect those directors, but sometimes overrule the appointments of their servants
in India. Provided he can enjoy this influence for a few years, and thereby
provide for a certain number of his friends, he frequently cares little about
the dividend, or even about the value of the stock upon which his vote is
founded. About the prosperity of the great empire, in the government of which
that vote gives him a share, he seldom cares at all. No other sovereigns ever
were, or, from the nature of things, ever could be, so perfectly indifferent
about the happiness or misery of their subjects, the improvement or waste of
their dominions, the glory or disgrace of their administration, as, from
irresistible moral causes, the greater part of the proprietors of such a
mercantile company are, and necessarily must be. This indifference, too, was
more likely to be increased than diminished by some of the new regulations which
were made in consequence of the Parliamentary inquiry. By a resolution of the
House of Commons, for example, it was declared, that when the fourteen hundred
thousand pounds lent to the company by government should be paid, and their
bond-debts be reduced to fifteen hundred thousand pounds, they might then, and
not till then, divide eight per cent upon their capital; and that whatever
remained of their revenues and net profits at home should be divided into four
parts; three of them to be paid into the exchequer for the use of the public,
and the fourth to be reserved as a fund either for the further reduction of
their bond-debts, or for the discharge of other contingent exigencies which the
company might labour under. But if the company were bad stewards, and bad
sovereigns, when the whole of their net revenue and profits belonged to
themselves, and were at their own disposal, they were surely not likely to be
better when three-fourths of them were to belong to other people, and the other
fourth, though to be laid out for the benefit of the company, yet to be so under
the inspection and with the approbation of other people.

It might be more agreeable to the company that their own servants and
dependants should have either the pleasure of wasting or the profit of
embezzling whatever surplus might remain after paying the proposed dividend of
eight per cent than that it should come into the hands of a set of people with
whom those resolutions could scarce fail to set them, in some measure, at
variance. The interest of those servants and dependants might so far predominate
in the court of proprietors as sometimes to dispose it to support the authors of
depredations which had been committed in direct violation of its own authority.
With the majority of proprietors, the support even of the authority of their own
court might sometimes be a matter of less consequence than the support of those
who had set that authority at defiance.

The regulations of 1773, accordingly, did not put an end to the disorders
of the company's government in India. Notwithstanding that, during a momentary
fit of good conduct, they had at one time collected into the treasury of
Calcutta more than three millions sterling; notwithstanding that they had
afterwards extended, either their dominion, or their depredations, over a vast
accession of some of the richest and most fertile countries in India, all was
wasted and destroyed. They found themselves altogether unprepared to stop or
resist the incursion of Hyder Ali; and, in consequence of those disorders, the
company is now (1784) in greater distress than ever; and, in order to prevent
immediate bankruptcy, is once more reduced to supplicate the assistance of
government. Different plans have been proposed by the different parties in
Parliament for the better management of its affairs. And all those plans seem to
agree insupposing, what was indeed always abundantly evident, that it is
altogether unfit to govern its territorial possessions. Even the company itself
seems to be convinced of its own incapacity so far, and seems, upon that
account, willing to give them up to government.

With the right of possessing forts and garrisons in distant and barbarous
countries is necessarily connected the right of making peace and war in those
countries. The joint stock companies which have had the one right have
constantly exercised the other, and have frequently had it expressly conferred
upon them. How unjustly, how capriciously, how cruelly they have commonly
exercised it, is too well known from recent experience.

When a company of merchants undertake, at their own risk and expense, to
establish a new trade with some remote and barbarous nation, it may not be
unreasonable to incorporate them into a joint stock company, and to grant them,
in case of their success, a monopoly of the trade for a certain number of years.
It is the easiest and most natural way in which the state can recompense them
for hazarding a dangerous and expensive experiment, of which the public is
afterwards to reap the benefit. A temporary monopoly of this kind may be
vindicated upon the same principles upon which a like monopoly of a new machine
is granted to its inventor, and that of a new book to its author. But upon the
expiration of the term, the monopoly ought certainly to determine; the forts and
garrisons, if it was found necessary to establish any, to be taken into the
hands of government, their value to be paid to the company, and the trade to be
laid open to all the subjects of the state. By a perpetual monopoly, all the
other subjects of the state are taxed very absurdly in two different ways:
first, by the high price of goods, which, in the case of a free trade, they
could buy much cheaper; and, secondly, by their total exclusion from a branch of
business which it might be both convenient and profitable for many of them to
carry on. It is for the most worthless of all purposes, too, that they are taxed
in this manner. It is merely to enable the company to support the negligence,
profusion, and malversation of their own servants, whose disorderly conduct
seldom allows the dividend of the company to exceed the ordinary rate of profit
in trades which are altogether free, and very frequently makes it fall even a
good deal short of that rate. Without a monopoly, however, a joint stock
company, it would appear from experience, cannot long carry on any branch of
foreign trade. To buy in one market, in order to sell, with profit, in another,
when there are many competitors in both, to watch over, not only the occasional
variations in the demand, but the much greater and more frequent variations in
the competition, or in the supply which that demand is likely to get from other
people, and to suit with dexterity and judgment both the quantity and quality of
each assortment of goods to all these circumstances, is a species of warfare of
which the operations are continually changing, and which can scarce ever be
conducted successfully without such an unremitting exertion of vigilance and
attention as cannot long be expected from the directors of a joint stock
company. The East India Company, upon the redemption of their funds, and the
expiration of their exclusive privilege, have right, by Act of Parliament, to
continue a corporation with a joint stock, and to trade in their corporate
capacity to the East Indies in common with the rest of their fellow-subjects.
But in this situation, the superior vigilance and attention of private
adventurers would, in all probability, soon make them weary of the trade.

An eminent French author, of great knowledge in matters of political
economy, the Abbe Morellet, gives a list of fifty-five joint stock companies for
foreign trade which have been established in different parts of Europe since the
year 1600, and which, according to him, have all failed from mismanagement,
notwithstanding they had exclusive privileges. He has been misinformed with
regard to the history of two or three of them, which were not joint stock
companies and have not failed. But, in compensation, there have been several
joint stock companies which have failed, and which he has omitted.

The only trades which it seems possible for a joint stock company to
carry on successfully without an exclusive privilege are those of which all the
operations are capable of being reduced to what is called a Routine, or to such
a uniformity of method as admits of little or no variation. Of this kind is,
first, the banking trade; secondly, the trade of insurance from fire, and from
sea risk and capture in time of war; thirdly, the trade of making and
maintaining a navigable cut or canal; and, fourthly, the similar trade of
bringing water for the supply of a great city.

Though the principles of the banking trade may appear somewhat abstruse,
the practice is capable of being reduced to strict rules. To depart upon any
occasion from those rules, in consequence of some flattering speculation of
extraordinary gain, is almost always extremely dangerous, and frequently fatal,
to the banking company which attempts it. But the constitution of joint stock
companies renders them in general more tenacious of established rules than any
private copartnery. Such companies, therefore, seem extremely well fitted for
this trade. The principal banking companies in Europe, accordingly, are joint
stock companies, many of which manage their trade very successfully without any
exclusive privilege. The Bank of England has no other exclusive privilege except
that no other banking company in England shall consist of more than six persons.
The two banks of Edinburgh are joint stock companies without any exclusive
privilege.

The value of the risk, either from fire, or from loss by sea, or by
capture, though it cannot, perhaps, be calculated very exactly, admits, however,
of such a gross estimation as renders it, in some degree, reducible to strict
rule and method. The trade of insurance, therefore, may be carried on
successfully by a joint stock company without any exclusive privilege. Neither
the London Assurance nor the Royal Exchange Assurance companies have any such
privilege.

When a navigable cut or canal has been once made, the management of it
becomes quite simple and easy, and it is reducible to strict rule and method.
Even the making of it is so as it may be contracted for with undertakers at so
much a mile, and so much a lock. The same thing may be said of a canal, an
aqueduct, or a great pipe for bringing water to supply a great city. Such
undertakings, therefore, may be, and accordingly frequently are, very
successfully managed by joint stock companies without any exclusive privilege.

To establish a joint stock company, however, for any undertaking, merely
because such a company might be capable of managing it successfully; or to
exempt a particular set of dealers from some of the general laws which take
place with regard to all their neighbours, merely because they might be capable
of thriving if they had such an exemption, would certainly not be reasonable. To
render such an establishment perfectly reasonable, with the circumstance of
being reducible to strict rule and method, two other circumstances ought to
concur. First, it ought to appear with the clearest evidence that the
undertaking is of greater and more general utility than the greater part of
common trades; and secondly, that it requires a greater capital than can easily
be collected into a private copartnery. If a moderate capital were sufficient,
the great utility of the undertaking would not be a sufficient reason for
establishing a joint stock company; because, in this case, the demand for what
it was to produce would readily and easily be supplied by private adventures. In
the four trades above mentioned, both those circumstances concur.

The great and general utility of the banking trade when prudently managed
has been fully explained in the second, book of this Inquiry. But a public bank
which is to support public credit, and upon particular emergencies to advance to
government the whole produce of a tax, to the amount, perhaps, of several
millions, a year or two before it comes in, requires a greater capital than can
easily be collected into any private copartnery.

The trade of insurance gives great security to the fortunes of private
people, and by dividing among a great many that loss which would ruin an
individual, makes it fall light and easy upon the whole society. In order to
give this security, however, it is necessary that the insurers should have a
very large capital. Before the establishment of the two joint stock companies
for insurance in London, a list, it is said, was laid before the
attorney-general of one hundred and fifty private insurers who had failed in the
course of a few years.

That navigable cuts and canals, and the works which are sometimes
necessary for supplying a great city with water, are of great and general
utility, while at the same time they frequently require a greater expense than
suits the fortunes of private people, is sufficiently obvious.

Except the four trades above mentioned, I have not been able to recollect
any other in which all the three circumstances requisite for rendering
reasonable the establishment of a joint stock company concur. The English copper
company of London, the lead smelting company, the glass grinding company, have
not even the pretext of any great or singular utility in the object which they
pursue; nor does the pursuit of that object seem to require any expense
unsuitable to the fortunes of many private men. Whether the trade which those
companies carry on is reducible to such strict rule and method as to render it
fit for the management of a joint stock company, or whether they have any reason
to boast of their extraordinary profits, I do not pretend to know. The
mine-adventurers' company has been long ago bankrupt. A share in the stock of
the British Linen Company of Edinburgh sells, at present, very much below par,
though less so that it did some years ago. The joint stock companies which are
established for the public-spirited purpose of promoting some particular
manufacture, over and above managing their own affairs ill, to the dimunition of
the general stock of the society, can in other respects scarce ever fail to do
more harm than good. Notwithstanding the most upright intentions, the
unavoidable partiality of their directors to particular branches of the
manufacture of which the undertakers mislead and impose upon them is a real
discouragement to the rest, and necessarily breaks, more or less, that natural
proportion which would otherwise establish itself between judicious industry and
profit, and which, to the general industry of the country, is of all
encouragements the greatest and the most effectual.

ARTICLE II

Of the Expense of the
Institutions for the Education of Youth

The institutions for the education of the youth may, in the same manner,
furnish a revenue sufficient for defraying their own expense. The fee or
honorary which the scholar pays to the master naturally constitutes a revenue of
this kind.

Even where the reward of the master does not arise altogether from this
natural revenue, it still is not necessary that it should be derived from that
general revenue of the society, of which the collection and application is, in
most countries, assigned to the executive power. Through the greater part of
Europe, accordingly, the endowment of schools and colleges makes either no
charge upon that general revenue, or but a very small one. It everywhere arises
chiefly from some local or provincial revenue, from the rent of some landed
estate, or from the interest of some sum of money allotted and put under the
management of trustees for this particular purpose, sometimes by the sovereign
himself, and sometimes by some private donor.

Have those public endowments contributed in general to promote the end of
their institution? Have they contributed to encourage the diligence and to
improve the abilities of the teachers? Have they directed the course of
education towards objects more useful, both to the individual and to the public,
than those to which it would naturally have gone of its own accord? It should
not seem very difficult to give at least a probable answer to each of those
questions.

In every profession, the exertion of the greater part of those who
exercise it is always in proportion to the necessity they are under of making
that exertion. This necessity is greatest with those to whom the emoluments of
their profession are the only source from which they expect their fortune, or
even their ordinary revenue and subsistence. In order to acquire this fortune,
or even to get this subsistence, they must, in the course of a year, execute a
certain quantity of work of a known value; and, where the competition is free,
the rivalship of competitors, who are all endeavouring to justle one another out
of employment, obliges every man to endeavour to execute his work with a certain
degree of exactness. The greatness of the objects which are to be acquired by
success in some particular professions may, no doubt, sometimes animate the
exertion of a few men of extraordinary spirit and ambition. Great objects,
however, are evidently not necessary in order to occasion the greatest
exertions. Rivalship and emulation render excellency, even in mean professions,
an object of ambition, and frequently occasion the very greatest exertions.
Great objects, on the contrary, alone and unsupported by the necessity of
application, have seldom been sufficient to occasion any considerable exertion.
In England, success in the profession of the law leads to some very great
objects of ambition; and yet how few men, born to easy fortunes, have ever in
this country been eminent in that profession!

The endowments of schools and colleges have necessarily diminished more
or less the necessity of application in the teachers. Their subsistence, so far
as it arises from their salaries, is evidently derived from a fund altogether
independent of their success and reputation in their particular professions.

In some universities the salary makes but a part, and frequently but a
small part, of the emoluments of the teacher, of which the greater part arises
from the honoraries or fees of his pupils. The necessity of application, though
always more or less diminished, is not in this case entirely taken away.
Reputation in his profession is still of some importance to him, and he still
has some dependency upon the affection, gratitude, and favourable report of
those who have attended upon his instructions; and these favourable sentiments
he is likely to gain in no way so well as by deserving them, that is, by the
abilities and diligence with which he discharges every part of his duty.

In other universities the teacher is prohibited from receiving any
honorary or fee from his pupils, and his salary constitutes the whole of the
revenue which he derives from his office. His interest is, in this case, set as
directly in opposition to his duty as it is possible to set it. It is the
interest of every man to live as much at his ease as he can; and if his
emoluments are to be precisely the same, whether he does or does not perform
some very laborious duty, it is certainly his interest, at least as interest is
vulgarly understood, either to neglect it altogether, or, if he is subject to
some authority which will not suffer him to do this, to perform it in as
careless and slovenly a manner as that authority will permit. If he is naturally
active and a lover of labour, it is his interest to employ that activity in any
way from which he can derive some advantage, rather than in the performance of
his duty, from which he can derive none.

If the authority to which he is subject resides in the body corporate,
the college, or university, of which he himself is a member, and which the
greater part of the other members are, like himself, persons who either are or
ought to be teachers, they are likely to make a common cause, to be all very
indulgent to one another, and every man to consent that his neighbour may
neglect his duty, provided he himself is allowed to neglect his own. In the
university of Oxford, the greater part of the public professors have, for these
many years, given up altogether even the pretence of teaching.

If the authority to which he is subject resides, not so much in the body
corporate of which he is a member, as in some other extraneous persons- in the
bishop of the diocese, for example; in the governor of the province; or,
perhaps, in some minister of state it is not indeed in this case very likely
that he will be suffered to neglect his duty altogether. All that such
superiors, however, can force him to do, is to attend upon his pupils a certain
number of hours, that is, to give a certain number of lectures in the week or in
the year. What those lectures shall be must still depend upon the diligence of
the teacher; and that diligence is likely to be proportioned to the motives
which he has for exerting it. An extraneous jurisdiction of this kind, besides,
is liable to be exercised both ignorantly and capriciously. In its nature it is
arbitrary and discretionary, and the persons who exercise it, neither attending
upon the lectures of the teacher themselves, nor perhaps understanding the
sciences which it is his business to teach, are seldom capable of exercising it
with judgment. From the insolence of office, too, they are frequently
indifferent how they exercise it, and are very apt to censure or deprive him of
his office wantonly, and without any just cause. The person subject to such
jurisdiction is necessarily degraded by it, and, instead of being one of the
most respectable, is rendered one of the meanest and most contemptible persons
in the society. It is by powerful protection only that he can effectually guard
himself against the bad usage to which he is at all times exposed; and this
protection he is most likely to gain, not by ability or diligence in his
profession, but by obsequiousness to the will of his superiors, and by being
ready, at all times, to sacrifice to that will the rights, the interest, and the
honour of the body corporate of which he is a member. Whoever has attended for
any considerable time to the administration of a French university must have had
occasion to remark the effects which naturally result from an arbitrary and
extraneous jurisdiction of this kind.

Whatever forces a certain number of students to any college or
university, independent of the merit or reputation of the teachers, tends more
or less to diminish the necessity of that merit or reputation.

The privileges of graduates in arts, in law, physic, and divinity, when
they can be obtained only by residing a certain number of years in certain
universities, necessarily force a certain number of students to such
universities, independent of the merit or reputation of the teachers. The
privileges of graduates are a sort of statutes of apprenticeship, which have
contributed to the improvement of education, just as the other statutes of
apprenticeship have to that of arts, and manufactures.

The charitable foundations of scholarships, exhibitions, bursaries, etc.,
necessarily attach a certain number of students to certain colleges, independent
altogether of the merit of those particular colleges. Were the students upon
such charitable foundations left free to choose what college they liked best,
such liberty might perhaps contribute to excite some emulation among different
colleges. A regulation, on the contrary, which prohibited even the independent
members of every particular college from leaving it and going to any other,
without leave first asked and obtained of that which they meant to abandon,
would tend very much to extinguish that emulation.

If in each college the tutor or teacher, who was to instruct each student
in all arts and sciences, should not be voluntarily chosen by the student, but
appointed by the head of the college; and if, in case of neglect, inability, or
bad usage, the student should not be allowed to change him for another, without
leave first asked and obtained, such a regulation would not only tend very much
to extinguish all emulation among the different tutors of the same college, but
to diminish very much in all of them the necessity of diligence and of attention
to their respective pupils. Such teachers, though very well paid by their
students, might be as much disposed to neglect them as those who are not paid by
them at all, or who have no other recompense but their salary.

If the teacher happens to be a man of sense, it must be an unpleasant
thing to him to be conscious, while he is lecturing his students, that he is
either speaking or reading nonsense, or what is very little better than
nonsense. It must, too, be unpleasant to him to observe that the greater part of
his students desert his lectures, or perhaps attend upon them with plain enough
marks of neglect, contempt, and derision. If he is obliged, therefore, to give a
certain number of lectures, these motives alone, without any other interest,
might dispose him to take some pains to give tolerably good ones. Several
different expedients, however, may be fallen upon which will effectually blunt
the edge of all those incitements to diligence. The teacher, instead of
explaining to his pupils himself the science in which he proposes to instruct
them, may read some book upon it; and if this book is written in a foreign and
dead language, by interpreting it to them into their own; or, what would give
him still less trouble, by making them interpret it to him, and by now and then
making an occasional remark upon it, he may flatter himself that he is giving a
lecture. The slightest degree of knowledge and application will enable him to do
this without exposing himself to contempt or derision, or saying anything that
is really foolish, absurd, or ridiculous. The discipline of the college, at the
same time, may enable him to force all his pupils to the most regular attendance
upon this sham lecture, and to maintain the most decent and respectful behaviour
during the whole time of the performance.

The discipline of colleges and universities is in general contrived, not
for the benefit of the students, but for the interest, or more properly
speaking, for the ease of the masters. Its object is, in all cases, to maintain
the authority of the master, and whether he neglects or performs his duty, to
oblige the students in all cases to behave to him, as if he performed it with
the greatest diligence and ability. It seems to presume perfect wisdom and
virtue in the one order, and the greatest weakness and folly in the other. Where
the masters, however, really perform their duty, there are no examples, I
believe, that the greater part of the students ever neglect theirs. No
discipline is ever requisite to force attendance upon lectures which are really
worth the attending, as is well known wherever any such lectures are given.
Force and restraint may, no doubt, be in some degree requisite in order to
oblige children, or very young boys, to attend to those parts of education which
it is thought necessary for them to acquire during that early period of life;
but after twelve or thirteen years of age, provided the master does his duty,
force or restraint can scarce ever be necessary to carry on any part of
education. Such is the generosity of the greater part of young men, that, so far
from being disposed to neglect or despise the instructions of their master,
provided he shows some serious intention of being of use to them, they are
generally inclined to pardon a great deal of incorrectness in the performance of
his duty, and sometimes even to conceal from the public a good deal of gross
negligence.

Those parts of education, it is to be observed, for the teaching of which
there are no public institutions, are generally the best taught. When a young
man goes to a fencing or a dancing school, he does not indeed always learn to
fence or to dance very well; but he seldom fails of learning to fence or to
dance. The good effects of the riding school are not commonly so evident. The
expense of a riding school is so great, that in most places it is a public
institution. The three most essential parts of literary education, to read,
write, and account, it still continues to be more common to acquire in private
than in public schools; and it very seldom happens that anybody fails of
acquiring them to the degree in which it is necessary to acquire them.

In England the public schools are much less corrupted than the
universities. In the schools the youth are taught, or at least may be taught,
Greek and Latin; that is, everything which the masters pretend to teach, or
which, it is expected, they should teach. In the universities the youth neither
are taught, nor always can find any proper means of being taught, the sciences
which it is the business of those incorporated bodies to teach. The reward of
the schoolmaster in most cases depends principally, in some cases almost
entirely, upon the fees or honoraries of his scholars. Schools have no exclusive
privileges. In order to obtain the honours of graduation, it is not necessary
that a person should bring a certificate of his having studied a certain number
of years at a public school. If upon examination he appears to understand what
is taught there, no questions are asked about the place where he learnt it.

The parts of education which are commonly taught in universities, it may,
perhaps, be said are not very well taught. But had it not been for those
institutions they would not have been commonly taught at all, and both the
individual and the public would have suffered a good deal from the want of those
important parts of education.

The present universities of Europe were originally, the greater part of
them, ecclesiastical corporations, instituted for the education of churchmen.
They were founded by the authority of the Pope, and were so entirely under his
immediate protection, that their members, whether masters or students, had all
of them what was then called the benefit of clergy, that is, were exempted from
the civil jurisdiction of the countries in which their respective universities
were situated, and were amenable only to the ecclesiastical tribunals. What was
taught in the greater part of those universities was suitable to the end of
their institution, either theology, or something that was merely preparatory to
theology.

When Christianity was first established by law, a corrupted Latin had
become the common language of all the western parts of Europe. The service of
the church accordingly, and the translation of the Bible which was read in
churches, were both in that corrupted Latin; that is, in the common language of
the country. After the irruption of the barbarous nations who overturned the
Roman empire, Latin gradually ceased to be the language of any part of Europe.
But the reverence of the people naturally preserves the established forms and
ceremonies of religion long after the circumstances which first introduced and
rendered them reasonable are no more. Though Latin, therefore, was no longer
understood anywhere by the great body of the people, the whole service of the
church still continued to be performed in that language. Two different languages
were thus established in Europe, in the same manner as in ancient Egypt; a
language of the priests, and a language of the people; a sacred and a profane; a
learned and an unlearned language. But it was necessary that the priests should
understand something of that sacred and learned language in which they were to
officiate; and the study of the Latin language therefore made, from the
beginning, an essential part of university education.

It was not so with that either of the Greek or of the Hebrew language.
The infallible decrees of the church had pronounced the Latin translation of the
Bible, commonly called the Latin Vulgate, to have been equally dictated by
divine inspiration, and therefore of equal authority with the Greek and Hebrew
originals. The knowledge of those two languages, therefore, not being
indispensably requisite to a churchman, the study of them did not for a long
time make a necessary part of the common course of university education. There
are some Spanish universities, I am assured, in which the study of the Greek
language has never yet made any part of that course. The first reformers found
the Greek text of the New Testament, and even the Hebrew text of the Old, more
favorable to their opinions than the Vulgate translation, which, as might
naturally be supposed, had been gradually accommodated to support the doctrines
of the Catholic Church. They set themselves, therefore, to expose the many
errors of that translation, which the Roman Catholic clergy were thus put under
the necessity of defending or explaining. But this could not well be done
without some knowledge of the original languages, of which the study was
therefore gradually introduced into the greater part of universities, both of
those which embraced, and of those which rejected, the doctrines of the
Reformation. The Greek language was connected with every part of that classical
learning which, though at first principally cultivated by Catholics and
Italians, happened to come into fashion much about the same time that the
doctrines of the Reformation were set on foot. In the greater part of
universities, therefore, that language was taught previous to the study of
philosophy, and as soon as the student had made some progress in the Latin. The
Hebrew language having no connection with classical learning, and, except the
Holy Scriptures, being the language of not a single book in any esteem, the
study of it did not commonly commence till after that of philosophy, and when
the student had entered upon the study of theology.

Originally the first rudiments both of the Greek and Latin languages were
taught in universities, and in some universities they still continue to be so.
In others it is expected that the student should have previously acquired at
least the rudiments of one or both of those languages, of which the study
continues to make everywhere a very considerable part of university education.

The ancient Greek philosophy was divided into three great branches;
physics, or natural philosophy; ethics, or moral philosophy; and logic. This
general division seems perfectly agreeable to the nature of things.

The great phenomena of nature- the revolutions of the heavenly bodies,
eclipses, comets; thunder, lightning, and other extraordinary meteors; the
generation, the life, growth, and dissolution of plants and animals- are objects
which, as they necessarily excite the wonder, so they naturally call forth the
curiosity, of mankind to inquire into their causes. Superstition first attempted
to satisfy this curiosity, by referring all those wonderful appearances to the
immediate agency of the gods. Philosophy afterwards endeavoured to account for
them from more familiar causes, or from such as mankind were better acquainted
with, than the agency of the gods. As those great phenomena are the first
objects of human curiosity, so the science which pretends to explain them must
naturally have been the first branch of philosophy that was cultivated. The
first philosophers, accordingly, of whom history has preserved any account,
appear to have been natural philosophers.

In every age and country of the world men must have attended to the
characters, designs, and actions of one another, and many reputable rules and
maxims for the conduct of human life must have been laid down and approved of by
common consent. As soon as writing came into fashion, wise men, or those who
fancied themselves such, would naturally endeavour to increase the number of
those established and respected maxims, and to express their own sense of what
was either proper or improper conduct, sometimes in the more artificial form of
apologues, like what are called the fables of Aesop; and sometimes in the more
simple one of apophthegms, or wise sayings, like the Proverbs of Solomon, the
verses of Theognis and Phocyllides, and some part of the works of Hesiod. They
might continue in this manner for a long time merely to multiply the number of
those maxims of prudence and morality, without even attempting to arrange them
in any very distinct or methodical order, much less to connect them together by
one or more general principles from which they were all deducible, like effects
from their natural causes. The beauty of a systematical arrangement of different
observations connected by a few common principles was first seen in the rude
essays of those ancient times towards a system of natural philosophy. Something
of the same kind was afterwards attempted in morals. The maxims of common life
were arranged in some methodical order, and connected together by a few common
principles, in the same manner as they had attempted to arrange and connect the
phenomena of nature. The science which pretends to investigate and explain those
connecting principles is what is properly called moral philosophy.

Different authors gave different systems both of natural and moral
philosophy. But the arguments by which they supported those different systems,
for from being always demonstrations, were frequently at best but very slender
probabilities, and sometimes mere sophisms, which had no other foundation but
the inaccuracy and ambiguity of common language. Speculative systems have in all
ages of the world been adopted for reasons too frivolous to have determined the
judgment of any man of common sense in a matter of the smallest pecuniary
interest. Gross sophistry has scarce ever had any influence upon the opinions of
mankind, except in matters of philosophy and speculation; and in these it has
frequently had the greatest. The patrons of each system of natural and moral
philosophy naturally endeavoured to expose the weakness of the arguments adduced
to support the systems which were opposite to their own. In examining those
arguments, they were necessarily led to consider the difference between a
probable and a demonstrative argument, between a fallacious and a conclusive
one: and Logic, or the science of the general principles of good and bad
reasoning, necessarily arose out of the observations which a scrutiny of this
kind gave occasion to. Though in its origin posterior both to physics and to
ethics, it was commonly taught, not indeed in all, but in the greater part of
the ancient schools of philosophy, previously to either of those sciences. The
student, it seems to have been thought, to understand well the difference
between good and bad reasoning before he was led to reason upon subjects of so
great importance.

This ancient division of philosophy into three parts was in the greater
part of the universities of Europe changed for another into five.

In the ancient philosophy, whatever was taught concerning the nature
either of the human mind or of the Deity, made a part of the system of physics.
Those beings, in whatever their essence might be supposed to consist, were parts
of the great system of the universe, and parts, too, productive of the most
important effects. Whatever human reason could either conclude or conjecture
concerning them, made, as it were, two chapters, though no doubt two very
important ones, of the science which pretended to give an account of the origin
and revolutions of the great system of the universe. But in the universities of
Europe, where philosophy was taught only as subservient to theology, it was
natural to dwell longer upon these two chapters than upon any other of the
science. They were gradually more and more extended, and were divided into many
inferior chapters, till at last the doctrine of spirits, of which so little can
be known, came to take up as much room in the system of philosophy as the
doctrine of bodies, of which so much can be known. The doctrines concerning
those two subjects were considered as making two distinct sciences. What are
called Metaphysics or Pneumatics were set in opposition to Physics, and were
cultivated not only as the more sublime, but, for the purposes of a particular
profession, as the more useful science of the two. The proper subject of
experiment and observation, a subject in which a careful attention is capable of
making so many useful discoveries, was almost entirely neglected. The subject in
which, after a few very simple and almost obvious truths, the most careful
attention can discover nothing but obscurity and uncertainty, and can
consequently produce nothing but subtleties and sophisms, was greatly
cultivated.

When those two sciences had thus been set in opposition to one another,
the comparison between them naturally gave birth to a third, to what was called
Ontology, or the science which treated of the qualities and attributes which
were common to both the subjects of the other two sciences. But if subtleties
and sophisms composed the greater part of the Metaphysics or Pneumatics of the
schools, they composed the whole of this cobweb science of Ontology, which was
likewise sometimes called Metaphysics.

Wherein consisted the happiness and perfection of a man, considered not
only as an individual, but as the member of a family, of a state, and of the
great society of mankind, was the object which the ancient moral philosophy
proposed to investigate. In that philosophy the duties of human life were
treated as subservient to the happiness and perfection of human life. But when
moral, as well as natural philosophy, came to be taught only as subservient to
theology, the duties of human life were treated of as chiefly subservient to the
happiness of a life to come. In the ancient philosophy the perfection of virtue
was represented as necessarily productive, to the person who possessed it, of
the most perfect happiness in this life. In the modern philosophy it was
frequently represented as generally, or rather as almost always, inconsistent
with any degree of happiness in this life; and heaven was to be earned only by
penance and mortification, by the austerities and abasement of a monk; not by
the liberal, generous, and spirited conduct of a man. Casuistry and an ascetic
morality made up, in most cases, the greater part of the moral philosophy of the
schools. By far the most important of all the different branches of philosophy
became in this manner by far the most corrupted.

Such, therefore, was the common course of philosophical education in the
greater part of the universities in Europe. Logic was taught first: Ontology
came in the second place: Pneumatology, comprehending the doctrine concerning
the nature of the human soul and of the Deity, in the third: in the fourth
followed a debased system of moral philosophy which was considered as
immediately connected with the doctrines of Pneumatology, with the immortality
of the human soul, and with the rewards and punishments which, from the justice
of the Deity, were to be expected in a life to come: a short and superficial
system of Physics usually concluded the course.

The alterations which the universities of Europe thus introduced into the
ancient course of philosophy were all meant for the education of ecclesiastics,
and to render it a more proper introduction to the study of theology. But the
additional quantity of subtlety and sophistry, the casuistry and the ascetic
morality which those alterations introduced into it, certainly did not render it
more proper for the education of gentlemen or men of the world, or more likely
either to improve the understanding, or to mend the heart.

This course of philosophy is what still continues to be taught in the
greater part of the universities of Europe, with more or less diligence,
according as the constitution of each particular university happens to render
diligence more or less necessary to the teachers. In some of the richest and
best endowed universities, the tutors content themselves with teaching a few
unconnected shreds and parcels of this corrupted course; and even these they
commonly teach very negligently and superficially.

The improvements which, in modern times, have been made in several
different branches of philosophy have not, the greater part of them, been made
in universities, though some no doubt have. The greater part of universities
have not even been very forward to adopt those improvements after they were
made; and several of those learned societies have chosen to remain, for a long
time, the sanctuaries in which exploded systems and obsolete prejudices found
shelter and protection after they had been hunted out of every other corner of
the world. In general, the richest and best endowed universities have been the
slowest in adopting those improvements, and the most averse to permit any
considerable change in the established plan of education. Those improvements
were more easily introduced into some of the poorer universities, in which the
teachers, depending upon their reputation for the greater part of their
subsistence, were obliged to pay more attention to the current opinions of the
world.

But though the public schools and universities of Europe were originally
intended only for the education of a particular profession, that of churchmen;
and though they were not always very diligent in instructing their pupils even
in the sciences which were supposed necessary for that profession, yet they
gradually drew to themselves the education of almost all other people,
particularly of almost all gentlemen and men of fortune. No better method, it
seems, could be fallen upon of spending, with any advantage, the long interval
between infancy and that period of life at which men begin to apply in good
earnest to the real business of the world, the business which is to employ them
during the remainder of their days. The greater part of what is taught in
schools and universities, however, does not seem to be the most proper
preparation for that business.

In England it becomes every day more and more the custom to send young
people to travel in foreign countries immediately upon their leaving school, and
without sending them to any university. Our young people, it is said, generally
return home much improved by their travels. A young man who goes abroad at
seventeen or eighteen, and returns home at one and twenty, returns three or four
years older than he was when he went abroad; and at that age it is very
difficult not to improve a good deal in three or four years. In the course of
his travels he generally acquires some knowledge of one or two foreign
languages; a knowledge, however, which is seldom sufficient to enable him either
to speak or write them with propriety. In other respects he commonly returns
home more conceited, more unprincipled, more dissipated, and more incapable of
any serious application either to study or to business than he could well have
become in so short a time had he lived at home. By travelling so very young, by
spending in the most frivolous dissipation the most precious years of his life,
at a distance from the inspection and control of his parents and relations,
every useful habit which the earlier parts of his education might have had some
tendency to form in him, instead of being riveted and confirmed, is almost
necessarily either weakened or effaced. Nothing but the discredit into which the
universities are allowing themselves to fall could ever have brought into repute
so very absurd a practice as that of travelling at this early period of life. By
sending his son abroad, a father delivers himself at least for some time, from
so disagreeable an object as that of a son unemployed, neglected, and going to
ruin before his eyes.

Such have been the effects of some of the modern institutions for
education.

Different plans and different institutions for education seem to have
taken place in other ages and nations.

In the republics of ancient Greece, every free citizen was instructed,
under the direction of the public magistrate, in gymnastic exercises and in
music. By gymnastic exercises it was intended to harden his body, to sharpen his
courage, and to prepare him for the fatigues and dangers of war; and as the
Greek militia was, by all accounts, one of the best that ever was in the world,
this part of their public education must have answered completely the purpose
for which it was intended. By the other part, music, it was proposed, at least
by the philosophers and historians who have given us an account of those
institutions, to humanize the mind, to soften the temper, and to dispose it for
performing all the social and moral duties both of public and private life.

In ancient Rome the exercises of the Campus Martius answered the purpose
as those of the Gymnasium in ancient Greece, and they seem to have answered it
equally well. But among the Romans there was nothing which corresponded to the
musical education of the Greeks. The morals of the Romans, however, both in
private and public life, seem to have been not only equal, but, upon the whole,
a good deal superior to those of the Greeks. That they were superior in private
life, we have the express testimony of Polybius and of Dionysius of
Halicarnassus, two authors well acquainted with both nations; and the whole
tenor if the Greek and Roman history bears witness to the superiority of the
public morals of the Romans. The good temper and moderation of contending
factions seems to be the most essential circumstances in the public morals of a
free people. But the factions of the Greeks were almost always violent and
sanguinary; whereas, till the time of the Gracchi, no blood had ever been shed
in any Roman faction; and from the time of the Gracchi the Roman republic may be
considered as in reality dissolved. Notwithstanding, therefore, the very
respectable authority of Plato, Aristotle, and Polybius, and notwithstanding the
very ingenious reasons by which Mr. Montesquieu endeavours to support that
authority, it seems probable that the musical education of the Greeks had no
great effect in mending their morals, since, without any such education, those
of the Romans were upon the whole superior. The respect of those ancient sages
for the institutions of their ancestors had probably disposed them to find much
political wisdom in what was, perhaps, merely an ancient custom, continued
without interruption from the earliest period of those societies to the times in
which they had arrived at a considerable degree of refinement. Music and dancing
are the great amusements of almost all barbarous nations, and the great
accomplishments which are supposed to fit any man for entertaining his society.
It is so at this day among the negroes on the coast of Africa. It was so among
the ancient Celts, among the ancient Scandinavians, and, as we may learn from
Homer, among the ancient Greeks in the times preceding the Trojan war. When the
Greek tribes had formed themselves into little republics, it was natural that
the study of those accomplishments should, for a long time, make a part of the
public and common education of the people.

The masters who instructed the young people, either in music or in
military exercises, do not seem to have been paid, or even appointed by the
state, either in Rome or even in Athens, the Greek republic of whose laws and
customs we are the best informed. The state required that every free citizen
should fit himself for defending it in war, and should, upon that account, learn
his military exercises. But it left him to learn them of such masters as he
could find, and it seems to have advanced nothing for this purpose but a public
field or place of exercise in which he should practise and perform them.

In the early ages both of the Greek and Roman republics, the other parts
of education seem to have consisted in learning to read, write, and account
according to the arithmetic of the times. These accomplishments the richer
citizens seem frequently to have acquired at home by the assistance of some
domestic pedagogue, who was generally either a slave or a freed-man; and the
poorer citizens, in the schools of such masters as made a trade of teaching for
hire. Such parts of education, however, were abandoned altogether to the care of
the parents or guardians of each individual. It does not appear that the state
ever assumed any inspection or direction of them. By a law of Solon, indeed, the
children were acquitted from maintaining those parents in their old age who had
neglected to instruct them in some profitable trade or business.

In the progress of refinement, when philosophy and rhetoric came into
fashion, the better sort of people used to send their children to the schools of
philosophers and rhetoricians, in order to be instructed in these fashionable
sciences. But those schools were not supported by the public. They were for a
long time barely tolerated by it. The demand for philosophy and rhetoric was for
a long time so small that the first professed teachers of either could not find
constant employment in any one city, but were obliged to travel about from place
to place. In this manner lived Zeno of Elea, Protagoras, Gorgias, Hippias, and
many others. As the demand increased, the schools both of philosophy and
rhetoric became stationary; first in Athens, and afterwards in several other
cities. The state, however, seems never to have encouraged them further than by
assigning some of them a particular place to teach in, which was sometimes done,
too, by private donors. The state seems to have assigned the Academy to Plato,
the Lyceum to Aristotle, and the Portico to Zeno of Citta, the founder of the
Stoics. But Epicurus bequeathed his gardens to his own school. Till about the
time of Marcus Antonius, however, no teacher appears to have had any salary from
the public, or to have had any other emoluments but what arose from the
honoraries or fees of his scholars. The bounty which that philosophical emperor,
as we learn from Lucian, bestowed upon one of the teachers of philosophy,
probably lasted no longer than his own life. There was nothing equivalent to the
privileges of graduation, and to have attended any of those schools was not
necessary, in order to be permitted to practise any particular trade or
profession. If the opinion of their own utility could not draw scholars to them,
the law neither forced anybody to go to them nor rewarded anybody for having
gone to them. The teachers had no jurisdiction over their pupils, nor any other
authority besides that natural authority, which superior virtue and abilities
never fail to procure from young people towards those who are entrusted with any
part of their education.

At Rome, the study of the civil law made a part of the education, not of
the greater part of the citizens, but of some particular families. The young
people, however, who wished to acquire knowledge in the law, had no public
school to go to, and had no other method of studying it than by frequenting the
company of such of their relations and friends as were supposed to understand
it. It is perhaps worth while to remark, that though the Laws of the Twelve
Tables were, many of them, copied from those of some ancient Greek republics,
yet law never seems to have grown up to be a science in any republic of ancient
Greece. In Rome it became a science very early, and gave a considerable degree
of illustration to those citizens who had the reputation of understanding it. In
the republics of ancient Greece, particularly in Athens, the ordinary courts of
justice consisted of numerous, and therefore disorderly, bodies of people, who
frequently decided almost at random, or as clamour, faction, and party spirit
happened to determine. The ignominy of an unjust decision, when it was to be
divided among five hundred, a thousand, or fifteen hundred people (for some of
their courts were so very numerous), could not fall very heavy upon any
individual. At Rome, on the contrary, the principal courts of justice consisted
either of a single judge or of a small number of judges, whose characters,
especially as they deliberated always in public, could not fail to be very much
affected by any rash or unjust decision. In doubtful cases such courts, from
their anxiety to avoid blame, would naturally endeavour to shelter themselves
under the example or precedent of the judges who had sat before them, either in
the same or in some other court. This attention to practice and precedent
necessarily formed the Roman law into that regular and orderly system in which
it has been delivered down to us; and the like attention has had the like
effects upon the laws of every other country where such attention has taken
place. The superiority of character in the Romans over that of the Greeks, so
much remarked by Polybius and Dionysius of Halicarnassus, was probably more
owing to the better constitution of their courts of justice than to any of the
circumstances to which those authors ascribe it. The Romans are said to have
been particularly distinguished for their superior respect to an oath. But the
people who were accustomed to make oath only before some diligent and
well-informed court of justice would naturally be much more attentive to what
they swore than they who were accustomed to do the same thing before mobbish and
disorderly assemblies.

The abilities, both civil and military, of the Greeks and Romans will
readily be allowed to have been at least equal to those of any modern nation.
Our prejudice is perhaps rather to overrate them. But except in what related to
military exercises, the state seems to have been at no pains to form those great
abilities, for I cannot be induced to believe that the musical education of the
Greeks could be of much consequence in forming them. Masters, however, had been
found, it seems, for instructing the better sort of people among those nations
in every art and science in which the circumstances of their society rendered it
necessary or convenient for them to be instructed. The demand for such
instruction produced what it always produces- the talent for giving it; and the
emulation which an unrestrained competition never fails to excite, appears to
have brought that talent to a very high degree of perfection. In the attention
which the ancient philosophers excited, in the empire which they acquired over
the opinions and principles of their auditors, in the faculty which they
possessed of giving a certain tone and character to the conduct and conversation
of those auditors, they appear to have been much superior to any modern
teachers. In modern times, the diligence of public teachers is more or less
corrupted by the circumstances which render them more or less independent of
their success and reputation in their particular professions. Their salaries,
too, put the private teacher, who would pretend to come into competition with
them, in the same state with a merchant who attempts to trade without a bounty
in competition with those who trade with a considerable one. If he sells his
goods at nearly the same price, he cannot have the same profit, and at least, if
not bankruptcy and ruin, will infallibly be his lot. If he attempts to sell them
much dearer, he is likely to have so few customers that his circumstances will
not be much mended. The privileges of graduation, besides, are in many countries
necessary, or at least extremely convenient, to most men of learned professions,
that is, to the far greater part of those who have occasion for a learned
education. But those privileges can be obtained only by attending the lectures
of the public teachers. The most careful attendance upon the ablest instructions
of any private teacher cannot always give any title to demand them. It is from
these different causes that the private teacher of any of the sciences which are
commonly taught in universities is in modern times generally considered as in
the very lowest order of men of letters. A man of real abilities can scarce find
out a more humiliating or a more unprofitable employment to turn them to. The
endowment of schools and colleges have, in this manner, not only corrupted the
diligence of public teachers, but have rendered it almost impossible to have any
good private ones.

Were there no public institutions for education, no system, no science
would be taught for which there was not some demand, or which the circumstances
of the times did not render it either necessary, or convenient, or at least
fashionable, to learn. A private teacher could never find his account in
teaching either an exploded and antiquated system of a science acknowledged to
be useful, or a science universally believed to be a mere useless and pedantic
heap of sophistry and nonsense. Such systems, such sciences, can subsist
nowhere, but in those incorporated societies for education whose prosperity and
revenue are in a great measure independent of their reputation and altogether
independent of their industry. Were there no public institutions for education,
a gentleman, after going through with application and abilities the most
complete course of education which the circumstances of the times were supposed
to afford, could not come into the world completely ignorant of everything which
is the common subject of conversation among gentlemen and men of the world.

There are no public institutions for the education of women, and there is
accordingly nothing useless, absurd, or fantastical in the common course of
their education. They are taught what their parents or guardians judge it
necessary or useful for them to learn, and they are taught nothing else. Every
part of their education tends evidently to some useful purpose; either to
improve the natural attractions of their person, or to form their mind to
reserve, to modesty, to chastity, and to economy; to render them both likely to
become the mistresses of a family, and to behave properly when they have become
such. In every part of her life a woman feels some conveniency or advantage from
every part of her education. It seldom happens that a man, in any part of his
life, derives any conveniency or advantage from some of the most laborious and
troublesome parts of his education.

Ought the public, therefore, to give no attention, it may be asked, to
the education of the people? Or if it ought to give any, what are the different
parts of education which it ought to attend to in the different orders of the
people? and in what manner ought it to attend to them?

In some cases the state of the society necessarily places the greater
part of individuals in such situations as naturally form in them, without any
attention of government, almost all the abilities and virtues which that state
requires, or perhaps can admit of. In other cases the state of the society does
not place the part of individuals in such situations, and some attention of
government is necessary in order to prevent the almost entire corruption and
degeneracy of the great body of the people.

In the progress of the division of labour, the employment of the far
greater part of those who live by labour, that is, of the great body of the
people, comes to be confined to a few very simple operations, frequently to one
or two. But the understandings of the greater part of men are necessarily formed
by their ordinary employments. The man whose whole life is spent in performing a
few simple operations, of which the effects are perhaps always the same, or very
nearly the same, has no occasion to exert his understanding or to exercise his
invention in finding out expedients for removing difficulties which never occur.
He naturally loses, therefore, the habit of such exertion, and generally becomes
as stupid and ignorant as it is possible for a human creature to become. The
torpor of his mind renders him not only incapable of relishing or bearing a part
in any rational conversation, but of conceiving any generous, noble, or tender
sentiment, and consequently of forming any just judgment concerning many even of
the ordinary duties of private life. Of the great and extensive interests of his
country he is altogether incapable of judging, and unless very particular pains
have been taken to render him otherwise, he is equally incapable of defending
his country in war. The uniformity of his stationary life naturally corrupts the
courage of his mind, and makes him regard with abhorrence the irregular,
uncertain, and adventurous life of a soldier. It corrupts even the activity of
his body, and renders him incapable of exerting his strength with vigour and
perseverance in any other employment than that to which he has been bred. His
dexterity at his own particular trade seems, in this manner, to be acquired at
the expense of his intellectual, social, and martial virtues. But in every
improved and civilised society this is the state into which the labouring poor,
that is, the great body of the people, must necessarily fall, unless government
takes some pains to prevent it.

It is otherwise in the barbarous societies, as they are commonly called,
of hunters, of shepherds, and even of husbandmen in that rude state of husbandry
which precedes the improvement of manufactures and the extension of foreign
commerce. In such societies the varied occupations of every man oblige every man
to exert his capacity and to invent expedients for removing difficulties which
are continually occurring. Invention is kept alive, and the mind is not suffered
to fall into that drowsy stupidity which, in a civilised society, seems to
benumb the understanding of almost all the inferior ranks of people. In those
barbarous societies, as they are called, every man, it has already been
observed, is a warrior. Every man, too, is in some measure a statesman, and can
form a tolerable judgment concerning the interest of the society and the conduct
of those who govern it. How far their chiefs are good judges in peace, or good
leaders in war, is obvious to the observation of almost every single man among
them. In such a society, indeed, no man can well acquire that improved and
refined understanding which a few men sometimes possess in a more civilised
state. Though in a rude society there is a good deal of variety in the
occupations of every individual, there is not a great deal in those of the whole
society. Every man does, or is capable of doing, almost every thing which any
other man does, or is capable of doing. Every man has a considerable degree of
knowledge, ingenuity, and invention: but scarce any man has a great degree. The
degree, however, which is commonly possessed, is generally sufficient for
conducting the whole simple business of the society. In a civilised state, on
the contrary, though there is little variety in the occupations of the greater
part of individuals, there is an almost infinite variety in those of the whole
society. These varied occupations present an almost infinite variety of objects
to the contemplation of those few, who, being attached to no particular
occupation themselves, have leisure and inclination to examine the occupations
of other people. The contemplation of so great a variety of objects necessarily
exercises their minds in endless comparisons and combinations, and renders their
understandings, in an extraordinary degree, both acute and comprehensive. Unless
those few, however, happen to be placed in some very particular situations,
their great abilities, though honourable to themselves, may contribute very
little to the good government or happiness of their society. Notwithstanding the
great abilities of those few, all the nobler parts of the human character may
be, in a great measure, obliterated and extinguished in the great body of the
people.

The education of the common people requires, perhaps, in a civilised and
commercial society the attention of the public more than that of people of some
rank and fortune. People of some rank and fortune are generally eighteen or
nineteen years of age before they enter upon that particular business,
profession, or trade, by which they propose to distinguish themselves in the
world. They have before that full time to acquire, or at least to fit themselves
for afterwards acquiring, every accomplishment which can recommend them to the
public esteem, or render them worthy of it. Their parents or guardians are
generally sufficiently anxious that they should be so accomplished, and are, in
most cases, willing enough to lay out the expense which is necessary for that
purpose. If they are not always properly educated, it is seldom from the want of
expense laid out upon their education, but from the improper application of that
expense. It is seldom from the want of masters, but from the negligence and
incapacity of the masters who are to be had, and from the difficulty, or rather
from the impossibility, which there is in the present state of things of finding
any better. The employments, too, in which people of some rank or fortune spend
the greater part of their lives are not, like those of the common people, simple
and uniform. They are almost all of them extremely complicated, and such as
exercise the head more than the hands. The understandings of those who are
engaged in such employments can seldom grow torpid for want of exercise. The
employments of people of some rank and fortune, besides, are seldom such as
harass them from morning to night. They generally have a good deal of leisure,
during which they may perfect themselves in every branch either of useful or
ornamental knowledge of which they may have laid the foundation, or for which
they may have acquired some taste in the earlier part of life.

It is otherwise with the common people. They have little time to spare
for education. Their parents can scarce afford to maintain them even in infancy.
As soon as they are able to work they must apply to some trade by which they can
earn their subsistence. That trade, too, is generally so simple and uniform as
to give little exercise to the understanding, while, at the same time, their
labour is both so constant and so severe, that it leaves them little leisure and
less inclination to apply to, or even to think of, anything else.

But though the common people cannot, in any civilised society, be so well
instructed as people of some rank and fortune, the most essential parts of
education, however, to read, write, and account, can be acquired at so early a
period of life that the greater part even of those who are to be bred to the
lowest occupations have time to acquire them before they can be employed in
those occupations. For a very small expense the public can facilitate, can
encourage, and can even impose upon almost the whole body of the people the
necessity of acquiring those most essential parts of education.

The public can facilitate this acquisition by establishing in every
parish or district a little school, where children may be taught for a reward so
moderate that even a common labourer may afford it; the master being partly, but
not wholly, paid by the public, because, if he was wholly, or even principally,
paid by it, he would soon learn to neglect his business. In Scotland the
establishment of such parish schools has taught almost the whole common people
to read, and a very great proportion of them to write and account. In England
the establishment of charity schools has had an effect of the same kind, though
not so universally, because the establishment is not so universal. If in those
little schools the books, by which the children are taught to read, were a
little more instructive than they commonly are, and if, instead of a little
smattering of Latin, which the children of the common people are sometimes
taught there, and which can scarce ever be of any use to them, they were
instructed in the elementary parts of geometry and mechanics, the literary
education of this rank of people would perhaps be as complete as it can be.
There is scarce a common trade which does not afford some opportunities of
applying to it the principles of geometry and mechanics, and which would not
therefore gradually exercise and improve the common people in those principles,
the necessary introduction to the most sublime as well as to the most useful
sciences.

The public can encourage the acquisition of those most essential parts of
education by giving small premiums, and little badges of distinction, to the
children of the common people who excel in them.

The public can impose upon almost the whole body of the people the
necessity of acquiring those most essential parts of education, by obliging
every man to undergo an examination or probation in them before he can obtain
the freedom in any corporation, or be allowed to set up any trade either in a
village or town corporate.

It was in this manner, by facilitating the acquisition of their military
and gymnastic exercises, by encouraging it, and even by imposing upon the whole
body of the people the necessity of learning those exercises, that the Greek and
Roman republics maintained the martial spirit of their respective citizens. They
facilitated the acquisition of those exercises by appointing a certain place for
learning and practising them, and by granting to certain masters the privilege
of teaching in that place. Those masters do not appear to have had either
salaries or exclusive privileges of any kind. Their reward consisted altogether
in what they got from their scholars; and a citizen who had learnt his exercises
in the public gymnasia had no sort of legal advantage over one who had learnt
them privately, provided the latter had learnt them equally well. Those
republics encouraged the acquisition of those exercises by bestowing little
premiums and badges of distinction upon: those who excelled in them. To have
gained a prize in the Olympic, Isthmian, or Nemaean games, gave illustration,
not only to the person who gained it, but to his whole family and kindred. The
obligation which every citizen was under to serve a certain number of years, if
called upon, in the armies of the republic, sufficiently imposed the necessity
of learning those exercises, without which he could not be fit for that service.

That in the progress of improvement the practice of military exercises,
unless government takes proper pains to support it, goes gradually to decay,
and, together with it, the martial spirit of the great body of the people, the
example of modern Europe sufficiently demonstrates. But the security of every
society must always depend, more or less, upon the martial spirit of the great
body of the people. In the present times, indeed, that martial spirit alone, and
unsupported by a well-disciplined standing army, would not perhaps be sufficient
for the defence and security of any society. But where every citizen had the
spirit of a soldier, a smaller standing army would surely be requisite. That
spirit, besides, would necessarily diminish very much the dangers to liberty,
whether real or imaginary, which are commonly apprehended from a standing army.
As it would very much facilitate the operations of that army against a foreign
invader, so it would obstruct them as much if, unfortunately, they should ever
be directed against the constitution of the state.

The ancient institutions of Greece and Rome seem to have been much more
effectual for maintaining the martial spirit of the great body of the people
than the establishment of what are called the militias of modern times. They
were much more simple. When they were once established they executed themselves,
and it required little or no attention from government to maintain them in the
most perfect vigour. Whereas to maintain, even in tolerable execution, the
complex regulations of any modern militia, requires the continual and painful
attention of government, without which they are constantly falling into total
neglect and disuse. The influence, besides, of the ancient institutions was much
more universal. By means of them the whole body of the people was completely
instructed in the use of arms. Whereas it is but a very small part of them who
can ever be so instructed by the regulations of any modern militia, except,
perhaps, that of Switzerland. But a coward, a man incapable either of defending
or of revenging himself, evidently wants one of the most essential parts of the
character of a man. He is as much mutilated and deformed in his mind as another
is in his body, who is either deprived of some of its most essential members, or
has lost the use of them. He is evidently the more wretched and miserable of the
two; because happiness and misery, which reside altogether in the mind, must
necessarily depend more upon the healthful or unhealthful, the mutilated or
entire state of the mind, than upon that of the body. Even though the martial
spirit of the people were of no use towards the defence of the society, yet to
prevent that sort of mental mutilation, deformity, and wretchedness, which
cowardice necessarily involves in it, from spreading themselves through the
great body of the people, would still deserve the most serious attention of
government, in the same manner as it would deserve its most serious attention to
prevent a leprosy or any other loathsome and offensive disease, though neither
mortal nor dangerous, from spreading itself among them, though perhaps no other
public good might result from such attention besides the prevention of so great
a public evil.

The same thing may be said of the gross ignorance and stupidity which, in
a civilised society, seem so frequently to benumb the understandings of all the
inferior ranks of people. A man without the proper use of the intellectual
faculties of a man, is, if possible, more contemptible than even a coward, and
seems to be mutilated and deformed in a still more essential part of the
character of human nature. Though the state was to derive no advantage from the
instruction of the inferior ranks of people, it would still deserve its
attention that they should not be altogether uninstructed. The state, however,
derives no inconsiderable advantage from their instruction. The more they are
instructed the less liable they are to the delusions of enthusiasm and
superstition, which, among ignorant nations, frequently occasion the most
dreadful disorders. An instructed and intelligent people, besides, are always
more decent and orderly than an ignorant and stupid one. They feel themselves,
each individually, more respectable and more likely to obtain the respect of
their lawful superiors, and they are therefore more disposed to respect those
superiors. They are more disposed to examine, and more capable of seeing
through, the interested complaints of faction and sedition, and they are, upon
that account, less apt to be misled into any wanton or unnecessary opposition to
the measures of government. In free countries, where the safety of government
depends very much upon the favourable judgment which the people may form of its
conduct, it must surely be of the highest importance that they should not be
disposed to judge rashly or capriciously concerning it.

ARTICLE III Of the Expense of the Institutions for the
Instruction of

People of all Ages

The institutions for the instruction of people of all ages are chiefly
those for religious instruction. This is a species of instruction of which the
object is not so much to render the people good citizens in this world, as to
prepare them for another and a better world in a life to come. The teachers of
the doctrine which contains this instruction, in the same manner as other
teachers, may either depend altogether for their subsistence upon the voluntary
contributions of their hearers, or they may derive it from some other fund to
which the law of their country may entitle them; such as a landed estate, a
tithe or land tax, an established salary or stipend. Their exertion, their zeal
and industry, are likely to be much greater in the former situation than in the
latter. In this respect the teachers of new religions have always had a
considerable advantage in attacking those ancient and established systems of
which the clergy, reposing themselves upon their benefices, had neglected to
keep up the fervour of faith and devotion in the great body of the people, and
having given themselves up to indolence, were become altogether incapable of
making any vigorous exertion in defence even of their own establishment. The
clergy of an established and well-endowed religion frequently become men of
learning and elegance, who possess all the virtues of gentlemen, or which can
recommend them to the esteem of gentlemen: but they are apt gradually to lose
the qualities, both good and bad, which gave them authority and influence with
the inferior ranks of people, and which had perhaps been the original causes of
the success and establishment of their religion. Such a clergy, when attacked by
a set of popular and bold, though perhaps stupid and ignorant enthusiasts, feel
themselves as perfectly defenceless as the indolent, effeminate, and full-fed
nations of the southern parts of Asia when they were invaded by the active,
hardy, and hungry Tartars of the North. Such a clergy, upon such an emergency,
have commonly no other resource than to call upon the civil magistrate to
persecute, destroy or drive out their adversaries, as disturbers of the public
peace. It was thus that the Roman Catholic clergy called upon the civil
magistrates to persecute the Protestants, and the Church of England to persecute
the Dissenters; and that in general every religious sect, when it has once
enjoyed for a century or two the security of a legal establishment, has found
itself incapable of making any vigorous defence against any new sect which chose
to attack its doctrine or discipline. Upon such occasions the advantage in point
of learning and good writing may sometimes be on the side of the established
church. But the arts of popularity, all the arts of gaining proselytes, are
constantly on the side of its adversaries. In England those arts have been long
neglected by the well-endowed clergy of the established church, and are at
present chiefly cultivated by the Dissenters and by the Methodists. The
independent provisions, however, which in many places have been made for
dissenting teachers by means of voluntary subscriptions, of trust rights, and
other evasions of the law, seem very much to have abated the zeal and activity
of those teachers. They have many of them become very learned, ingenious, and
respectable men; but they have in general ceased to be very popular preachers.
The Methodists, without half the learning of the Dissenters, are much more in
vogue.

In the Church of Rome, the industry and zeal of the inferior clergy are
kept more alive by the powerful motive of self-interest than perhaps in any
established Protestant church. The parochial clergy derive, many of them, a very
considerable part of their subsistence from the voluntary oblations of the
people; a source of revenue which confession gives them many opportunities of
improving. The mendicant orders derive their whole subsistence from such
oblations. It is with them as with the hussars and light infantry of some
armies; no plunder, no pay. The parochial clergy are like those teachers whose
reward depends partly upon their salary, and partly upon the fees or honoraries
which they get from their pupils, and these must always depend more or less upon
their industry and reputation. The mendicant orders are like those teachers
whose subsistence depends altogether upon the industry. They are obliged,
therefore, to use every art which can animate the devotion of the common people.
The establishment of the two great mendicant orders of St. Dominic and St.
Francis, it is observed by Machiavel, revived, in the thirteenth and fourteenth
centuries, the languishing faith and devotion of the Catholic Church. In Roman
Catholic countries the spirit of devotion is supported altogether by the monks
and by the poorer parochial clergy. The great dignitaries of the church, with
all the accomplishments of gentlemen and men of the world, and sometimes with
those of men of learning, are careful enough to maintain the necessary
discipline over their inferiors, but seldom give themselves any trouble about
the instruction of the people.

"Most of the arts and professions in a state," says by far the
most illustrious philosopher and historian of the present age, "are of such
a nature that, while they promote the interests of the society, they are also
useful or agreeable to some individuals; and in that case, the constant rule of
the magistrate, except perhaps on the first introduction of any art, is to leave
the profession to itself, and trust its encouragement to the individuals who
reap the benefit of it. The artisans, finding their profits to rise by the
favour of their customers, increase as much as possible their skill and
industry; and as matters are not disturbed by any injudicious tampering, the
commodity is always sure to be at all times nearly proportioned to the demand.

"But there are also some callings, which, though useful and even
necessary in a state, bring no advantage or pleasure to any individual, and the
supreme power is obliged to alter its conduct with regard to the retainers of
those professions. It must give them public encouragement in order to their
subsistence, and it must provide against that negligence to which they will
naturally be subject, either by annexing particular honours to the profession,
by establishing a long subordination of ranks and a strict dependence, or by
some other expedient. The persons employed in the finances, fleets, and
magistracy, are instances of this order of men.

"It may naturally be thought, at first sight, that the ecclesiastics
belong to the first class, and that their encouragement, as well as that of
lawyers and physicians, may safely be entrusted to the liberality of
individuals, who are attached to their doctrines, and who find benefit or
consolation from their spiritual ministry and assistance. Their industry and
vigilance will, no doubt, be whetted by such an additional motive; and their
skill in the profession, as well as their address in governing the minds of the
people, must receive daily increase from their increasing practice, study, and
attention.

"But if we consider the matter more closely, we shall find that this
interested diligence of the clergy is what every wise legislator will study to
prevent; because in every religion except the true it is highly pernicious, and
it has even a natural tendency to pervert the true, by infusing into it a strong
mixture of superstition, folly, and delusion. Each ghostly practitioner, in
order to render himself more precious and sacred in the eyes of his retainers,
will inspire them with the most violent abhorrence of all other sects, and
continually endeavour, by some novelty, to excite the languid devotion of his
audience. No regard will be paid to truth, morals, or decency in the doctrines
inculcated. Every tenet will be adopted that best suits the disorderly
affections of the human frame. Customers will be drawn to each conventicle by
new industry and address in practising on the passions and credulity of the
populace. And in the end, the civil magistrate will find that he has dearly paid
for his pretended frugality, in saving a fixed establishment for the priests;
and that in reality the most decent and advantageous composition which he can
make with the spiritual guides, is to bribe their indolence by assigning stated
salaries to their profession, and rendering it superfluous for them to be
farther active than merely to prevent their flock from straying in quest of new
pastures. And in this manner ecclesiastical establishments, though commonly they
arose at first from religious views, prove in the end advantageous to the
political interests of society."

But whatever may have been the good or bad effects of the independent
provision of the clergy, it has, perhaps, been very seldom bestowed upon them
from any view to those effects. Times of violent religious controversy have
generally been times of equally violent political faction. Upon such occasions,
each political party has either found it, or imagined it, for its interest to
league itself with some one or other of the contending religious sects. But this
could be done only by adopting, or at least by favouring, the tenets of that
particular sect. The sect which had the good fortune to be leagued with the
conquering party necessarily shared in the victory of its ally, by whose favour
and protection it was soon enabled in some degree to silence and subdue all its
adversaries. Those adversaries had generally leagued themselves with the enemies
of the conquering party, and were therefore the enemies of that party. The
clergy of this particular sect having thus become complete masters of the field,
and their influence and authority with the great body of the people being in its
highest vigour, they were powerful enough to overawe the chiefs and leaders of
their own party, and to oblige the civil magistrate to respect their opinions
and inclinations. Their first demand was generally that he should silence and
subdue an their adversaries: and their second, that he should bestow an
independent provision on themselves. As they had generally contributed a good
deal to the victory, it seemed not unreasonable that they should have some share
in the spoil. They were weary, besides, of humouring the people, and of
depending upon their caprice for a subsistence. In making this demand,
therefore, they consulted their own ease and comfort, without troubling
themselves about the effect which it might have in future times upon the
influence and authority of their order. The civil magistrate, who could comply
with this demand only by giving them something which he would have chosen much
rather to take, or to keep to himself, was seldom very forward to grant it.
Necessity, however, always forced him to submit at last, though frequently not
till after many delays, evasions, and affected excuses.

But if politics had never called in the aid of religion, had the
conquering party never adopted the tenets of one sect more than those of another
when it had gained the victory, it would probably have dealt equally and
impartially with all the different sects, and have allowed every man to choose
his own priest and his own religion as he thought proper. There would in this
case, no doubt' have been a great multitude of religious sects. Almost every
different congregation might probably have made a little sect by itself, or have
entertained some peculiar tenets of its own. Each teacher would no doubt have
felt himself under the necessity of making the utmost exertion and of using
every art both to preserve and to increase the number of his disciples. But as
every other teacher would have felt himself under the same necessity, the
success of no one teacher, or sect of teachers, could have been very great. The
interested and active zeal of religious teachers can be dangerous and
troublesome only where there is either but one sect tolerated in the society, or
where the whole of a large society is divided into two or three great sects; the
teachers of each acting by concert, and under a regular discipline and
subordination. But that zeal must be altogether innocent where the society is
divided into two or three hundred, or perhaps into as many thousand small sects,
of which no one could be considerable enough to disturb the public tranquility.
The teachers of each sect, seeing themselves surrounded on all sides with more
adversaries than friends, would be obliged to learn that candour and moderation
which is so seldom to be found among the teachers of those great sects whose
tenets, being supported by the civil magistrate, are held in veneration by
almost all the inhabitants of extensive kingdoms and empires, and who therefore
see nothing round them but followers, disciples, and humble admirers. The
teachers of each little sect, finding themselves almost alone, would be obliged
to respect those of almost every other sect, and the concessions which they
would mutually find it both convenient and agreeable to make to one another,
might in time probably reduce the doctrine of the greater part of them to that
pure and rational religion, free from every mixture of absurdity, imposture, or
fanaticism, such as wise men have in all ages of the world wished to see
established; but such as positive law has perhaps never yet established, and
probably never will establish, in any country: because, with regard to religion,
positive law always has been, and probably always will be, more or less
influenced by popular superstition and enthusiasm. This plan of ecclesiastical
government, or more properly of no ecclesiastical government, was what the sect
called Independents, a sect no doubt of very wild enthusiasts, proposed to
establish in England towards the end of the civil war. If it had been
established, though of a very unphilosophical origin, it would probably by this
time have been productive of the most philosophical good temper and moderation
with regard to every sort of religious principle. It has been established in
Pennsylvania, where, though the Quakers happen to be the most numerous, the law
in reality favours no one sect more than another, and it is there said to have
been productive of this philosophical good temper and moderation.

But though this equality of treatment should not be productive of this
good temper and moderation in all, or even in the greater part of the religious
sects of a particular country, yet provided those sects were sufficiently
numerous, and each of them consequently too small to disturb the public
tranquillity, the excessive zeal of each for its particular tenets could not
well be productive of any very harmful effects, but, on the contrary, of several
good ones: and if the government was perfectly decided both to let them all
alone, and to oblige them all to let alone one another, there is little danger
that they would not of their own accord subdivide themselves fast enough so as
soon to become sufficiently numerous.

In every civilised society, in every society where the distinction of
ranks has once been completely established, there have been always two different
schemes or systems of morality current at the same time; of which the one may be
called the strict or austere; the other the liberal, or, if you will, the loose
system. The former is generally admired and revered by the common people: the
latter is commonly more esteemed and adopted by what are called people of
fashion. The degree of disapprobation with which we ought to mark the vices of
levity, the vices which are apt to arise from great prosperity, and from the
excess of gaiety and good humour, seems to constitute the principal distinction
between those two opposite schemes or systems. In the liberal or loose system,
luxury, wanton and even disorderly mirth, the pursuit of pleasure to some degree
of intemperance, the breach of chastity, at least in one of the two sexes, etc.,
provided they are not accompanied with gross indecency, and do not lead to
falsehood or injustice, are generally treated with a good deal of indulgence,
and are easily either excused or pardoned altogether. In the austere system, on
the contrary, those excesses are regarded with the utmost abhorrence and
detestation. The vices of levity are always ruinous to the common people, and a
single week's thoughtlessness and dissipation is often sufficient to undo a poor
workman for ever, and to drive him through despair upon committing the most
enormous crimes. The wiser and better sort of the common people, therefore, have
always the utmost abhorrence and detestation of such excesses, which their
experience tells them are so immediately fatal to people of their condition. The
disorder and extravagance of several years, on the contrary, will not always
ruin a man of fashion, and people of that rank are very apt to consider the
power of indulging in some degree of excess as one of the advantages of their
fortune, and the liberty of doing so without censure or reproach as one of the
privileges which belong to their station. In people of their own station,
therefore, they regard such excesses with but a small degree of disapprobation,
and censure them either very slightly or not at all.

Almost all religious sects have begun among the common people, from whom
they have generally drawn their earliest as well as their most numerous
proselytes. The austere system of morality has, accordingly, been adopted by
those sects almost constantly, or with very few exceptions; for there have been
some. It was the system by which they could best recommend themselves to that
order of people to whom they first proposed their plan of reformation upon what
had been before established. Many of them, perhaps the greater part of them,
have even endeavoured to gain credit by refining upon this austere system, and
by carrying it to some degree of folly and extravagance; and this excessive
rigour has frequently recommended them more than anything else to the respect
and veneration of the common people.

A man of rank and fortune is by his station the distinguished member of a
great society, who attend to every part of his conduct, and who thereby oblige
him to attend to every part of it himself. His authority and consideration
depend very much upon the respect which this society bears to him. He dare not
do anything which would disgrace or discredit him in it, and he is obliged to a
very strict observation of that species of morals, whether liberal or austere,
which the general consent of this society prescribes to persons of his rank and
fortune. A man of low condition, on the contrary, is far from being a
distinguished member of any great society. While he remains in a country village
his conduct may be attended to, and he may be obliged to attend to it himself.
In this situation, and in this situation only, he may have what is called a
character to lose. But as soon as he comes into a great city he is sunk in
obscurity and darkness. His conduct is observed and attended to by nobody, and
he is therefore very likely to neglect it himself, and to abandon himself to
every sort of low profligacy and vice. He never emerges so effectually from this
obscurity, his conduct never excites so much the attention of any respectable
society, as by his becoming the member of a small religious sect. He from that
moment acquires a degree of consideration which he never had before. All his
brother sectaries are, for the credit of the sect, interested to observe his
conduct, and if he gives occasion to any scandal, if he deviates very much from
those austere morals which they almost always require of one another, to punish
him by what is always a very severe punishment, even where no civil effects
attend it, expulsion or excommunication from the sect. In little religious
sects, accordingly, the morals of the common people have been almost always
remarkably regular and orderly; generally much more so than in the established
church. The morals of those little sects, indeed, have frequently been rather
disagreeably rigorous and unsocial.

There are two very easy and effectual remedies, however, by whose joint
operation the state might, without violence, correct whatever was unsocial or
disagreeably rigorous in the morals of all the little sects into which the
country was divided.

The first of those remedies is the study of science and philosophy, which
the state might render almost universal among all people of middling or more
than middling rank and fortune; not by giving salaries to teachers in order to
make them negligent and idle, but by instituting some sort of probation, even in
the higher and more difficult sciences, to be undergone by every person before
he was permitted to exercise any liberal profession, or before he could be
received as a candidate for any honourable office of trust or profit. If the
state imposed upon this order of men the necessity of learning, it would have no
occasion to give itself any trouble about providing them with proper teachers.
They would soon find better teachers for themselves than any whom the state
could provide for them. Science is the great antidote to the poison of
enthusiasm and superstition; and where all the superior ranks of people were
secured from it, the inferior ranks could not be much exposed to it.

The second of those remedies is the frequency and gaiety of public
diversions. The state, by encouraging, that is by giving entire liberty to all
those who for their own interest would attempt without scandal or indecency, to
amuse and divert the people by painting, poetry, music, dancing; by all sorts of
dramatic representations and exhibitions, would easily dissipate, in the greater
part of them, that melancholy and gloomy humour which is almost always the nurse
of popular superstition and enthusiasm. Public diversions have always been the
objects of dread and hatred to all the fanatical promoters of those popular
frenzies. The gaiety and good humour which those diversions inspire were
altogether inconsistent with that temper of mind which was fittest for their
purpose, or which they could best work upon. Dramatic representations, besides,
frequently exposing their artifices to public ridicule, and sometimes even to
public execration, were upon that account, more than all other diversions, the
objects of their peculiar abhorrence.

In a country where the law favoured the teachers of no one religion more
than those of another, it would not be necessary that any of them should have
any particular or immediate dependency upon the sovereign or executive power; or
that he should have anything to do either in appointing or in dismissing them
from their offices. In such a situation he would have no occasion to give
himself any concern about them, further than to keep the peace among them in the
same manner as among the rest of his subjects; that is, to hinder them from
persecuting, abusing, or oppressing one another. But it is quite otherwise in
countries where there is an established or governing religion. The sovereign can
in this case never be secure unless he has the means of influencing in a
considerable degree the greater part of the teachers of that religion.

The clergy of every established church constitute a great incorporation.
They can act in concert, and pursue their interest upon one plan and with one
spirit, as much as if they were under the direction of one man; and they are
frequently, too, under such direction. Their interest as an incorporated body is
never the same with that of the sovereign, and is sometimes directly opposite to
it. Their great interest is to maintain their authority with the people; and
this authority depends upon the supposed certainty and importance of the whole
doctrine which they inculcate, and upon the supposed necessity of adopting every
part of it with the most implicit faith, in order to avoid eternal misery.
Should the sovereign have the imprudence to appear either to deride or doubt
himself of the most trifling part of their doctrine, or from humanity attempt to
protect those who did either the one or the other, the punctilious honour of a
clergy who have no sort of dependency upon him is immediately provoked to
proscribe him as a profane person, and to employ all the terrors of religion in
order to oblige the people to transfer their allegiance to some more orthodox
and obedient prince. Should he oppose any of their pretensions or usurpations,
the danger is equally great. The princes who have dared in this manner to rebel
against the church, over and above this crime of rebellion have generally been
charged, too, with the additional crime of heresy, notwithstanding their solemn
protestations of their faith and humble submission to every tenet which she
thought proper to prescribe to them. But the authority of religion is superior
to every other authority. The fears which it suggests conquer all other fears.
When the authorized teachers of religion propagate through the great body of the
people doctrines subversive of the authority of the sovereign, it is by violence
only, or by the force of a standing army, that he can maintain his authority.
Even a standing army cannot in this case give him any lasting security; because
if the soldiers are not foreigners, which can seldom be the case, but drawn from
the great body of the people, which must almost always be the case, they are
likely to be soon corrupted by those very doctrines. The revolutions which the
turbulence of the Greek clergy was continually occasioning at Constantinople, as
long as the eastern empire subsisted; the convulsions which, during the course
of several centuries, the turbulence of the Roman clergy was continually
occasioning in every part of Europe, sufficiently demonstrate how precarious and
insecure must always be the situation of the sovereign who has no proper means
of influencing the clergy of the established and governing religion of his
country.

Articles of faith, as well as all other spiritual matters, it is evident
enough, are not within the proper department of a temporal sovereign, who,
though he may be very well qualified for protecting, is seldom supposed to be so
for instructing the people. With regard to such matters, therefore, his
authority can seldom be sufficient to counterbalance the united authority of the
clergy of the established church. The public tranquillity, however, and his own
security, may frequently depend upon the doctrines which they may think proper
to propagate concerning such matters. As he can seldom directly oppose their
decision, therefore, with proper weight and authority, it is necessary that he
should be able to influence it; and be can influence it only by the fears and
expectations which he may excite in the greater part of the individuals of the
order. Those fears and expectations may consist in the fear of deprivation or
other punishment, and in the expectation of further preferment.

In all Christian churches the benefices of the clergy are a sort of
freeholds which they enjoy, not during pleasure, but during life or good
behaviour. If they held them by a more precarious tenure, and were liable to be
turned out upon every slight disobligation either of the sovereign or of his
ministers, it would perhaps be impossible for them to maintain their authority
with the people, who would then consider them as mercenary dependents upon the
court, in the security of whose instructions they could no longer have any
confidence. But should the sovereign attempt irregularly, and by violence, to
deprive any number of clergymen of their freeholds, on account, perhaps, of
their having propagated, with more than ordinary zeal, some factious or
seditious doctrine, he would only render, by such persecution, both them and
their doctrine ten times more popular, and therefore ten times more troublesome
and dangerous, than they had been before. Fear is in almost all cases a wretched
instrument of government, and ought in particular never to be employed against
any order of men who have the smallest pretensions to independency. To attempt
to terrify them serves only to irritate their bad humour, and to confirm them in
an opposition which more gentle usage perhaps might easily induce them either to
soften or to lay aside altogether. The violence which the French government
usually employed in order to oblige all their parliaments, or sovereign courts
of justice, to enregister any unpopular edict, very seldom succeeded. The means
commonly employed, however, the imprisonment of all the refractory members, one
would think were forcible enough. The princes of the house of Stewart sometimes
employed the like means in order to influence some of the members of the
Parliament of England; and they generally found them equally intractable. The
Parliament of England is now managed in another manner; and a very small
experiment which the Duke of Choiseul made about twelve years ago upon the
Parliament of Paris, demonstrated sufficiently that all the parliaments of
France might have been managed still more easily in the same manner. That
experiment was not pursued. For though management and persuasion are always the
easiest and the safest instruments of governments, as force and violence are the
worst and the most dangerous, yet such, it seems, is the natural insolence of
man that he almost always disdains to use the good instrument, except when he
cannot or dare not use the bad one. The French government could and durst use
force, and therefore disdained to use management and persuasion. But there is no
order of men, it appears, I believe, from the experience of all ages, upon whom
it is so dangerous, or rather so perfectly ruinous, to employ force and
violence, as upon the respected clergy of any established church. The rights,
the privileges, the personal liberty of every individual ecclesiastic who is
upon good terms with his own order are, even in the most despotic governments,
more respected than those of any other person of nearly equal rank and fortune.
It is so in every gradation of despotism, from that of the gentle and mild
government of Paris to that of the violent and furious government of
Constantinople. But though this order of men can scarce ever be forced, they may
be managed as easily as any other; and the security of the sovereign, as well as
the public tranquillity, seems to depend very much upon the means which he has
of managing them; and those means seem to consist altogether in the preferment
which he has to bestow upon them.

In the ancient constitution of the Christian church, the bishop of each
diocese was elected by the joint votes of the clergy and of the people of the
episcopal city. The people did not long retain their right of election; and
while they did retain it, they almost always acted under the influence of the
clergy, who in such spiritual matters appeared to be their natural guides. The
clergy, however, soon grew weary of the trouble of managing them, and found it
easier to elect their own bishops themselves. The abbot, in the same manner, was
elected by the monks of the monastery, at least in the greater part of the
abbacies. All the inferior ecclesiastical benefices comprehended within the
diocese were collated by the bishop, who bestowed them upon such ecclesiastics
as he thought proper. All church preferments were in this manner in the disposal
of the church. The sovereign, though he might have some indirect influence in
those elections, and though it was sometimes usual to ask both his consent to
elect and his approbation of the election, yet had no direct or sufficient means
of managing the clergy. The ambition of every clergyman naturally led him to pay
court not so much to his sovereign as to his own order, from which only he could
expect preferment.

Through the greater part of Europe the Pope gradually drew to himself
first the collation of almost all bishoprics and abbacies, or of what were
called Consistorial benefices, and afterwards, by various machinations and
pretences, of the greater part of inferior benefices comprehended within each
diocese; little more being left to the bishop than what was barely necessary to
give him a decent authority with his own clergy. By this arrangement the
condition of the sovereign was still worse than it had been before. The clergy
of all the different countries of Europe were thus formed into a sort of
spiritual army, dispersed in different quarters, indeed, but of which all the
movements and operations could now be directed by one head, and conducted upon
one uniform plan. The clergy of each particular country might be considered as a
particular detachment of that army, or which the operations could easily be
supported and seconded by all the other detachments quartered in the different
countries round about. Each detachment was not only independent of the sovereign
of the country in which it was quartered, and by which it was maintained, but
dependent upon a foreign sovereign, who could at any time turn its arms against
the sovereign of that particular country, and support them by the arms of all
the other detachments.

Those arms were the most formidable that can well be imagined. In the
ancient state of Europe, before the establishment of arts and manufactures, the
wealth of the clergy gave them the same sort of influence over the common people
which that of the great barons gave them over their respective vassals, tenants,
and retainers. In the great landed estates which the mistaken piety both of
princes and private persons had bestowed upon the church, jurisdictions were
established of the same kind with those of the great barons, and for the same
reason. In those great landed estates, the clergy, or their bailiffs, could
easily keep the peace without the support or assistance either of the king or of
any other person; and neither the king nor any other person could keep the peace
there without the support and assistance of the clergy. The jurisdictions of the
clergy, therefore, in their particular baronies or manors, were equally
independent, and equally exclusive of the authority of the king's courts, as
those of the great temporal lords. The tenants of the clergy were, like those of
the great barons, almost all tenants at will, entirely dependent upon their
immediate lords, and therefore liable to be called out at pleasure in order to
fight in any quarrel in which the clergy might think proper to engage them. Over
and above the rents of those estates, the clergy possessed in the tithes, a very
large portion of the rents of all the other estates in every kingdom of Europe.
The revenues arising from both those species of rents were, the greater part of
them, paid in kind, in corn, wine, cattle poultry, etc. The quantity exceeded
greatly what the clergy could themselves consume; and there were neither arts
nor manufactures for the produce of which they could exchange the surplus. The
clergy could derive advantage from this immense surplus in no other way than by
employing it, as the great barons employed the like surplus of their revenues,
in the most profuse hospitality, and in the most extensive charity. Both the
hospitality and the charity of the ancient clergy, accordingly, are said to have
been very great. They not only maintained almost the whole poor of every
kingdom, but many knights and gentlemen had frequently no other means of
subsistence than by travelling about from monastery to monastery, under pretence
of devotion, but in reality to enjoy the hospitality of the clergy. The
retainers of some particular prelates were often as numerous as those of the
greatest lay-lords; and the retainers of all the clergy taken together were,
perhaps, more numerous than those of all the lay-lords. There was always much
more union among the clergy than among the lay-lords. The former were under a
regular discipline and subordination to the papal authority. The latter were
under no regular discipline or subordination, but almost always equally jealous
of one another, and of the king. Though the tenants and retainers of the clergy,
therefore, had both together been less numerous than those of the great
lay-lords, and their tenants were probably much less numerous, yet their union
would have rendered them more formidable. The hospitality and charity of the
clergy, too, not only gave them the command of a great temporal force, but
increased very much the weight of their spiritual weapons. Those virtues
procured them the highest respect and veneration among all the inferior ranks of
people, of whom many were constantly, and almost all occasionally, fed by them.
Everything belonging or related to so popular an order, its possessions, its
privileges, its doctrines, necessarily appeared sacred in the eyes of the common
people, and every violation of them, whether real or pretended, the highest act
of sacrilegious wickedness and profaneness. In this state of things, if the
sovereign frequently found it difficult to resist the confederacy of a few of
the great nobility, we cannot wonder that he should find it still more so to
resist the united force of the clergy of his own dominions, supported by that of
the clergy of all the neighbouring dominions. In such circumstances the wonder
is, not that he was sometimes obliged to yield, but that he ever was able to
resist.

The privilege of the clergy in those ancient times (which to us who live
in the present times appear the most absurd), their total exemption from the
secular jurisdiction, for example, or what in England was called the benefit of
the clergy, were the natural or rather the necessary consequences of this state
of things. How dangerous must it have been for the sovereign to attempt to
punish a clergyman for any crime whatever, if his own order were disposed to
protect him, and to represent either the proof as insufficient for convicting so
holy a man, or the punishment as too severe to be inflicted upon one whose
person had been rendered sacred by religion? The sovereign could, in such
circumstances, do no better than leave him to be tried by the ecclesiastical
courts, who, for the honour of their own order, were interested to restrain, as
much as possible, every member of it from committing enormous crimes, or even
from giving occasion to such gross scandal as might disgust the minds of the
people.

In the state in which things were through the greater part of Europe
during the tenth, eleventh, twelfth, and thirteenth centuries, and for some time
both before and after that period, the constitution of the Church of Rome may be
considered as the most formidable combination that ever was formed against the
authority and security of civil government, as well as against the liberty,
reason, and happiness of mankind, which can flourish only where civil government
is able to protect them. In that constitution the grossest delusions of
superstition were supported in such a manner by the private interests of so
great a number of people as put them out of all danger from any assault of human
reason: because though human reason might perhaps have been able to unveil, even
to the eyes of the common people, some of the delusions of superstition, it
could never have dissolved the ties of private interest. Had this constitution
been attacked by no other enemies but the feeble efforts of human reason, it
must have endured for ever. But that immense and well-built fabric, which all
the wisdom and virtue of man could never have shaken, much less have overturned,
was by the natural course of things, first weakened, and afterwards in part
destroyed, and is now likely, in the course of a few centuries more, perhaps, to
crumble into ruins altogether.

The gradual improvements of arts, manufactures, and commerce, the same
causes which destroyed the power of the great barons, destroyed in the same
manner, through the greater part of Europe, the whole temporal power of the
clergy. In the produce of arts, manufactures, and commerce, the clergy, like the
great barons, found something for which they could exchange their rude produce,
and thereby discovered the means of spending their whole revenues upon their own
persons, without giving any considerable share of them to other people. Their
charity became gradually less extensive, their hospitality less liberal or less
profuse. Their retainers became consequently less numerous, and by degrees
dwindled away altogether. The clergy too, like the great barons, wished to get a
better rent from their landed estates, in order to spend it, in the same manner,
upon the gratification of their own private vanity and folly. But this increase
of rent could be got only by granting leases to their tenants, who thereby
became in a great measure independent of them. The ties of interest which bound
the inferior ranks of people to the clergy were in this manner gradually broken
and dissolved. They were even broken and dissolved sooner than those which bound
the same ranks of people to the great barons: because the benefices of the
church being, the greater part of them, much smaller than the estates of the
great barons, the possessor of each benefice was much sooner able to spend the
whole of its revenue upon his own person. During the greater part of the
fourteenth and fifteenth centuries the power of the great barons was, through
the greater part of Europe, in full vigour. But the temporal power of the
clergy, the absolute command which they had once had over the great body of the
people, was very much decayed. The power of the church was by that time very
nearly reduced through the greater part of Europe to what arose from her
spiritual authority; and even that spiritual authority was much weakened when it
ceased to be supported by the charity and hospitality of the clergy. The
inferior ranks of people no longer looked upon that order, as they had done
before, as the comforters of their distress, and the relievers of their
indigence. On the contrary, they were provoked and disgusted by the vanity,
luxury, and expense of the richer clergy, who appeared to spend upon their own
pleasures what had always before been regarded as the patrimony of the poor.

In this situation of things, the sovereigns in the different states of
Europe endeavoured to recover the influence which they had once had in the
disposal of the great benefices of the church, by procuring to the deans and
chapters of each diocese the restoration of their ancient right of electing the
bishop, and to the monks of each abbacy that of electing the abbot. The
re-establishing of this ancient order was the object of several statutes enacted
in England during the course of the fourteenth century, particularly of what is
called the Statute of Provisors; and of the Pragmatic Sanction established in
France in the fifteenth century. In order to render the election valid, it was
necessary that the sovereign should both consent to it beforehand, and
afterwards approve of the person elected; and though the election was still
supposed to be free, he had, however, all the indirect means which his situation
necessarily afforded him of influencing the clergy in his own dominions. Other
regulations of a similar tendency were established in other parts of Europe. But
the power of the pope in the collation of the great benefices of the church
seems, before the Reformation, to have been nowhere so effectually and so
universally restrained as in France and England. The Concordat afterwards, in
the sixteenth century, gave to the kings of France the absolute right of
presenting to all the great, or what are called the consistorial, benefices of
the Gallican Church.

Since the establishment of the Pragmatic Sanction and of the Concordat,
the clergy of France have in general shown less respect to the decrees of the
papal court than the clergy of any other Catholic country. In all the disputes
which their sovereign has had with the pope, they have almost constantly taken
party with the former. This independency of the clergy of France upon the court
of Rome seems to be principally founded upon the Pragmatic Sanction and the
Concordat. In the earlier periods of the monarchy, the clergy of France appear
to have been as much devoted to the pope as those of any other country. When
Robert, the second prince of the Capetian race, was most unjustly excommunicated
by the court of Rome, his own servants, it is said, threw the victuals which
came from his table to the dogs, and refused to taste anything themselves which
little been polluted by the contact of a person in his situation. They were
taught to do so, it may very safely be presumed, by the clergy of his own
dominions.

The claim of collating to the great benefices of the church, a claim in
defence of which the court of Rome had frequently shaken, and sometimes
overturned the thrones of some of the greatest sovereigns in Christendom, was in
this manner either restrained or modified, or given up altogether, in many
different parts of Europe, even before the time of the Reformation. As the
clergy had now less influence over the people, so the state had more influence
over the clergy. The clergy, therefore, had both less power and less inclination
to disturb the state.

The authority of the Church of Rome was in this state of declension when
the disputes which gave birth to the Reformation began in Germany, and soon
spread themselves through every part of Europe. The new doctrines were
everywhere received with a high degree of popular favour. They were propagated
with all that enthusiastic zeal which commonly animates the spirit of party when
it attacks established authority. The teachers of those doctrines, though
perhaps in other respects not more learned than many of the divines who defended
the established church, seem in general to have been better acquainted with
ecclesiastical history, and with the origin and progress of that system of
opinions upon which the authority of the church was established, and they had
thereby some advantage in almost every dispute. The austerity of their manners
gave them authority with the common people, who contrasted the strict regularity
of their conduct with the disorderly lives of the greater part of their own
clergy. They possessed, too, in a much higher degree than their adversaries all
the arts of popularity and of gaining proselytes, arts which the lofty and
dignified sons of the church had long neglected as being to them in a great
measure useless. The reason of the new doctrines recommended them to some, their
novelty to many; the hatred and contempt of the established clergy to a still
greater number; but the zealous, passionate, and fanatical, though frequently
coarse and rustic, eloquence with which they were almost everywhere inculcated,
recommended them to by far the greatest number.

The success of the new doctrines was almost everywhere so great that the
princes who at that time happened to be on bad terms with the court of Rome were
by means of them easily enabled, in their own dominions, to overturn the church,
which, having lost the respect and veneration of the inferior ranks of people,
could make scarce any resistance. The court of Rome had disobliged some of the
smaller princes in the northern parts of Germany, whom it had probably
considered as too insignificant to be worth the managing. They universally,
therefore, established the Reformation in their own dominions. The tyranny of
Christian II and of Troll, Archbishop of Upsala, enabled Gustavus Vasa to expel
them both from Sweden. The pope favoured the tyrant and the archbishop, and
Gustavus Vasa found no difficulty in establishing the Reformation in Sweden.
Christian II was afterwards deposed from the throne of Denmark, where his
conduct had rendered him as odious as in Sweden. The pope, however, was still
disposed to favour him, and Frederick of Holstein, who had mounted the throne in
his stead, revenged himself by following the example of Gustavus Vasa. The
magistrates of Berne and Zurich, who had no particular quarrel with the pope,
established with great ease the Reformation in their respective cantons, where
just before some of the clergy had, by an imposture somewhat grosser than
ordinary, rendered the whole order both odious and contemptible.

In this critical situation of its affairs, the papal court was at
sufficient pains to cultivate the friendship of the powerful sovereigns of
France and Spain, of whom the latter was at that time Emperor of Germany. With
their assistance it was enabled, though not without great difficulty and much
bloodshed, either to suppress altogether or to obstruct very much the progress
of the Reformation in their dominions. It was well enough inclined, too, to be
complaisant to the King of England. But from the circumstances of the times, it
could not be so without giving offence to a still greater sovereign, Charles V,
King of Spain and Emperor of Germany. Henry VIII accordingly, though he did not
embrace himself the greater part of the doctrines of the Reformation, was yet
enabled, by their general prevalence, to suppress all the monasteries, and to
abolish the authority of the Church of Rome in his dominions. That he should go
so far, though he went no further, gave some satisfaction to the patrons of the
Reformation, who having got possession of the government in the reign of his son
and successor, completed without any difficulty the work which Henry VIII had
begun.

In some countries, as in Scotland, where the government was weak,
unpopular, and not very firmly established, the Reformation was strong enough to
overturn, not only the church, but the state likewise for attempting to support
the church.

Among the followers of the Reformation dispersed in all the different
countries of Europe, there was no general tribunal which, like that of the court
of Rome, or an oecumenical council, could settle all disputes among them, and
with irresistible authority prescribe to all of them the precise limits of
orthodoxy. When the followers of the Reformation in one country, therefore,
happened to differ from their brethren in another, as they had no common judge
to appeal to, the dispute could never be decided; and many such disputes arose
among them. Those concerning the government of the church, and the right of
conferring ecclesiastical benefices, were perhaps the most interesting to the
peace and welfare of civil society. They gave birth accordingly to the two
principal parties of sects among the followers of the Reformation, the Lutheran
and Calvinistic sects, the only sects among them of which the doctrine and
discipline have ever yet been established by law in any part of Europe.

The followers of Luther, together with what is called the Church of
England, preserved more or less of the episcopal government, established
subordination among the clergy, gave the sovereign the disposal of all the
bishoprics and other consistorial benefices within his dominions, and thereby
rendered him the real head of the church; and without depriving the bishop of
the right of collating to the smaller benefices within his diocese, they, even
to those benefices, not only admitted, but favoured the right of presentation
both in the sovereign and in all other lay-patrons. This system of church
government was from the beginning favourable to peace and good order, and to
submission to the civil sovereign. It has never, accordingly, been the occasion
of any tumult or civil commotion in any country in which it has once been
established. The Church of England in particular has always valued herself, with
great reason, upon the unexceptionable loyalty of her principles. Under such a
government the clergy naturally endeavour to recommend themselves to the
sovereign, to the court, and to the nobility and gentry of the country, by whose
influence they chiefly expect to obtain preferment. They pay court to those
patrons sometimes, no doubt, by the vilest flattery and assentation, but
frequently, too, by cultivating all those arts which best deserve, and which are
therefore most likely to gain them the esteem of people of rank and fortune; by
their knowledge in all the different branches of useful and ornamental learning,
by the decent liberality of their manners, by the social good humour of their
conversation, and by their avowed contempt of those absurd and hypocritical
austerities which fanatics inculcate and pretend to practise, in order to draw
upon themselves the veneration, and upon the greater part of men of rank and
fortune, who avow that they do not practise them, the abhorrence of the common
people. Such a clergy, however, while they pay their court in this manner to the
higher ranks of life, are very apt to neglect altogether the means of
maintaining their influence and authority with the lower. They are listened to,
esteemed, and respected by their superiors; but before their inferiors they are
frequently incapable of defending, effectually and to the conviction of such
hearers, their own sober and moderate doctrines against the most ignorant
enthusiast who chooses to attack them.

The followers of Zwingli, or more properly those of Calvin, on the
contrary, bestowed upon the people of each parish, whenever the church became
vacant, the right of electing their own pastor, and established at the same time
the most perfect equality among the clergy. The former part of this institution,
as long as it remained in vigour, seems to have been productive of nothing but
disorder and confusion, and to have tended equally to corrupt the morals both of
the clergy and of the people. The latter part seems never to have had any
effects but what were perfectly agreeable.

As long as the people of each parish preserved the right of electing
their own pastors, they acted almost always under the influence of the clergy,
and generally of the most factious and fanatical of the order. The clergy, in
order to preserve their influence in those popular elections, became, or
affected to become, many of them, fanatics themselves, encouraged fanaticism
among the people, and gave the preference almost always to the most fanatical
candidate. So small a matter as the appointment of a parish priest occasioned
almost always a violent contest, not only in one parish, but in all the
neighbouring parishes, who seldom failed to take part in the quarrel. When the
parish happened to be situated in a great city, it divided all the inhabitants
into two parties; and when that city happened either to constitute itself a
little republic, or to be the head and capital of a little republic, as is the
case with many of the considerable cities in Switzerland and Holland, every
paltry dispute of this kind, over and above exasperating the animosity of all
their other factions, threatened to leave behind it both a new schism in the
church, and a new faction in the state. In those small republics, therefore, the
magistrate very soon found it necessary, for the sake of preserving the public
peace, to assume to himself the right of presenting to all vacant benefices. In
Scotland, the most extensive country in which this Presbyterian form of church
government has ever been established, the rights of patronage were in effect
abolished by the act which established Presbytery in the beginning of the reign
of William III. That act at least put it in the power of certain classes of
people in each parish to purchase, for a very small price, the right of electing
their own pastor. The constitution which this act established was allowed to
subsist for about two-and-twenty years, but was abolished by the 10th of Queen
Anne, c. 12, on account of the confusions and disorders which this more popular
mode of, election had almost everywhere occasioned. In so extensive a country as
Scotland, however, a tumult in a remote parish was not so likely to give
disturbance to government as in a smaller state. The 10th of Queen Anne restored
the rights of patronage. But though in Scotland the law gives the benefice
without any exception to the person presented by the patron, yet the church
requires sometimes (for she has not in this respect been very uniform in her
decisions) a certain concurrence of the people before she will confer upon the
presentee what is called the cure of souls, or the ecclesiastical jurisdiction
in the parish. She sometimes at least, from an affected concern for the peace of
the parish, delays the settlement till this concurrence can be procured. The
private tampering of some of the neighbouring clergy, sometimes to procure, but
more frequently to prevent, this concurrence, and the popular arts which they
cultivate in order to enable them upon such occasions to tamper more
effectually, are perhaps the causes which principally keep up whatever remains
of the old fanatical spirit, either in the clergy or in the people of Scotland.

The equality which the Presbyterian form of church government establishes
among the clergy, consists, first, in the equality of authority or
ecclesiastical jurisdiction; and, secondly, in the equality of benefice. In all
Presbyterian churches the equality of authority is perfect: that of benefice is
not so. The difference, however, between one benefice and another is seldom so
considerable as commonly to tempt the possessor even of the small one to pay
court to his patron by the vile arts of flattery and assentation in order to get
a better. In all the Presbyterian churches, where the rights of patronage are
thoroughly established, it is by nobler and better arts that the established
clergy in general endeavour to gain the favour of their superiors; by their
learning, by the irreproachable regularity of their life, and by the faithful
and diligent discharge of their duty. Their patrons even frequently complain of
the independency of their spirit, which they are apt to construe into
ingratitude for past favours, but which at worst, perhaps, is seldom any more
than that indifference which naturally arises from the consciousness that no
further favours of the kind are ever to be expected. There is scarce perhaps to
be found anywhere in Europe a more learned, decent, independent, and respectable
set of men than the greater part of the Presbyterian clergy of Holland, Geneva,
Switzerland, and Scotland.

Where the church benefices are all nearly equal, none of them can be very
great, and this mediocrity of benefice, though it may no doubt be carried, too
far, has, however, some very agreeable effects. Nothing but the most exemplary
morals can give dignity to a man of small fortune. The vices of levity and
vanity necessarily render him ridiculous, and are, besides, almost as ruinous to
him as they are to the common people. In his own conduct, therefore, he is
obliged to follow that system of morals which the common people respect the
most. He gains their esteem and affection by that plan of life which his own
interest and situation would lead him to follow. The common people look upon him
with that kindness with which we naturally regard one who approaches somewhat to
our own condition, but who, we think, ought to be in a higher. Their kindness
naturally provokes his kindness. He becomes careful to instruct them, and
attentive to assist and relieve them. He does not even despise the prejudices of
people who are disposed to be so favourable to him, and never treats them with
those contemptuous and arrogant airs which we so often meet with in the proud
dignitaries of opulent and well-endowed churches. The Presbyterian clergy,
accordingly, have more influence over the minds of the common people than
perhaps the clergy of any other established church. It is accordingly in
Presbyterian countries only that we ever find the common people converted,
without persecution, completely, and almost to a man, to the established church.

In countries where church benefices are the greater part of them very
moderate, a chair in a university is generally a better establishment than a
church benefice. The universities have, in this case, the picking and choosing
of their members from all the churchmen of the country, who, in every country,
constitute by far the most numerous class of men of letters. Where church
benefices, on the contrary, are many of them very considerable, the church
naturally draws from the universities the greater part of their eminent men of
letters, who generally find some patron who does himself honour by procuring
them church preferment. In the former situation we are likely to find the
universities filled with the most eminent men of letters that are to be found in
the country. In the latter we are likely to find few eminent men among them, and
those few among the youngest members of the society, who are likely, too, to be
drained away from it before they can have acquired experience and knowledge
enough to be of much use to it. It is observed by Mr. de Voltaire, that Father
Porrie, a Jesuit of no great eminence in the republic of letters, was the only
professor they had ever had in France whose works were worth the reading. In a
country which has produced so many eminent men of letters, it must appear
somewhat singular that scarce one of them should have been a professor in a
university. The famous Gassendi was, in the beginning of his life, a professor
in the University of Aix. Upon the first dawning of his genius, it was
represented to him that by going into the church he could easily find a much
more quiet and comfortable subsistence, as well as a better situation for
pursuing his studies; and he immediately followed the advice. The observation of
Mr. de Voltaire may be applied, I believe, not only to France, but to all other
Roman Catholic countries. We very rarely find, in any of them, an eminent man of
letters who is a professor in a university, except, perhaps, in the professions
of law and physic; professions from which the church is not so likely to draw
them. After the Church of Rome, that of England is by far the richest and best
endowed church in Christendom. In England, accordingly, the church is
continually draining the universities of all their best and ablest members; and
an old college tutor, who is known and distinguished in Europe as an eminent man
of letters, is as rarely to be found there as in any Roman Catholic country. In
Geneva, on the contrary, in the Protestant cantons of Switzerland, in the
Protestant countries of Germany, in Holland, in Scotland, in Sweden, and
Denmark, the most eminent men of letters whom those countries have produced,
have, not all indeed, but the far greater part of them, been professors in
universities. In those countries the universities are continually draining the
church of all its most eminent men of letters.

It may, perhaps, be worth while to remark that, if we expect the poets, a
few orators, and a few historians, the far greater part of the other eminent men
of letters, both of Greece and Rome, appear to have been either public or
private teachers; generally either of philosophy or of rhetoric. This remark
will be found to hold true from the days of Lysias and Isocrates, of Plato and
Aristotle, down to those of Plutarch and Epictetus, of Suetonius and Quintilian.
To impose upon any man the necessity of teaching, year after year, any
particular branch of science, seems, in reality, to be the most effectual method
for rendering him completely master of it himself. By being obliged to go every
year over the same ground, if he is good for anything, he necessarily becomes,
in a few years, well acquainted with every part of it: and if upon any
particular point he should form too hasty an opinion one year, when he comes in
the course of his lectures to reconsider the same subject the year thereafter,
he is very likely to correct it. As to be a teacher of science is certainly the
natural employment of a mere man of letters, so is it likewise, perhaps, the
education which is most likely to render him a man of solid learning and
knowledge. The mediocity of church benefices naturally tends to draw the greater
part of men of letters, in the country where it takes place, to the employment
in which they can be the most useful to the public, and, at the same time, to
give them the best education, perhaps, they are capable of receiving. It tends
to render their learning both as solid as possible, and as useful as possible.

The revenue of every established church, such parts of it excepted as may
arise from particular lands or manors, is a branch, it ought to be observed, of
the general revenue of the state which is thus diverted to a purpose very
different from the defence of the state. The tithe, for example, is a real
land-tax, which puts it out of the power of the proprietors of land to
contribute so largely towards the defence of the state as they otherwise might
be able to do. The rent of land, however, is, according to some, the sole fund,
and, according to others, the principal fund, from which, in all great
monarchies, the exigencies of the state must be ultimately supplied. The more of
this fund that is given to the church, the less, it is evident, can be spared to
the state. It may be laid down as a certain maxim that, all other things being
supposed equal, the richer the church, the poorer must necessarily be, either
the sovereign on the one hand, or the people on the other; and, in all cases,
the less able must the state be to defend itself. In several Protestant
countries, particularly in all the Protestant cantons of Switzerland, the
revenue which anciently belonged to the Roman Catholic Church, the tithes and
church lands, has been found a fund sufficient, not only to afford competent
salaries to the established clergy, but to defray, with little or no addition,
all the other expenses of the state. The magistrates of the powerful canton of
Berne, in particular, have accumulated out of the savings from this fund a very
large sum, supposed to amount to several millions, part of which is deposited in
a public treasure, and part is placed at interest in what are called the public
funds of the different indebted nations of Europe; chiefly in those of France
and Great Britain. What may be the amount of the whole expense which the church,
either of Berne, or of any other Protestant canton, costs the state, I do not
pretend to know. By a very exact account it appears that, in 1755, the whole
revenue of the clergy of the Church of Scotland, including their glebe or church
lands, and the rent of their manses or dwelling-houses, estimated according to a
reasonable valuation, amounted only to L68,514 1s. 5 1/12d. This very moderate
revenue affords a decent subsistence to nine hundred and forty-four ministers.
The whole expense of the church, including what is occasionally laid out for the
building and reparation of churches, and of the manses of ministers, cannot well
be supposed to exceed eighty or eighty-five thousand pounds a year. The most
opulent church in Christendom does not maintain better the uniformity of faith,
the fervour of devotion, the spirit of order, regularity, and austere morals in
the great body of the people, than this very poorly endowed Church of Scotland.
All the good effects, both civil and religious, which an established church can
be supposed to produce, are produced by it as completely as by any other. The
greater part of the Protestant churches of Switzerland, which in general are not
better endowed than the Church of Scotland, produce those effects in a still
higher degree. In the greater part of the Protestant cantons there is not a
single person to be found who does not profess himself to be of the established
church. If he professes himself to be of any other, indeed, the law obliges him
to leave the canton. But so severe, or rather indeed so oppressive a law, could
never have been executed in such free countries had not the diligence of the
clergy beforehand converted to the established church the whole body of the
people, with the exception of, perhaps, a few individuals only. In some parts of
Switzerland, accordingly, where, from the accidental union of a Protestant and
Roman Catholic country, the conversion has not been so complete, both religions
are not only tolerated but established by law.

The proper performance of every service seems to require that its pay or
recompense should be, as exactly as possible, proportioned to the nature of the
service. If any service is very much underpaid, it is very apt to suffer by the
meanness and incapacity of the greater part of those who are employed in it. If
it is very much overpaid, it is apt to suffer, perhaps, still more by their
negligence and idleness. A man of a large revenue, whatever may be his
profession, thinks he ought to live like other men of large revenues, and to
spend a great part of his time in festivity, in vanity, and in dissipation. But
in a clergyman this train of life not only consumes the time which ought to be
employed in the duties of his function, but in the eyes of the common people
destroys almost entirely that sanctity of character which can alone enable him
to perform those duties with proper weight and authority.

PART 4

Of the Expense of Supporting the Dignity of the Sovereign
Over and above the expenses necessary for enabling the sovereign to perform his
several duties, a certain expense is requisite for the support of his dignity.
This expense varies both with the different periods of improvement, and with the
different forms of government.

In an opulent and improved society, where all the different orders of
people are growing every day more expensive in their houses, in their furniture,
in their tables, in their dress, and in their equipage, it cannot well be
expected that the sovereign should alone hold out against the fashion. He
naturally, therefore, or rather necessarily, becomes more expensive in all those
different articles too. His dignity even seems to require that he should become
so.

As in point of dignity a monarch is more raised above his subjects than
the chief magistrate of any republic is ever supposed to be above his
fellow-citizens, so a greater expense is necessary for supporting that higher
dignity. We naturally expect more splendour in the court of a king than in the
mansion-house of a doge or burgomaster.

CONCLUSION

The expense of defending the society, and that of supporting the dignity
of the chief magistrate, are both laid out for the general benefit of the whole
society. It is reasonable, therefore, that they should be defrayed by the
general contribution of the whole society, all the different members
contributing, as nearly as possible, in proportion to their respective
abilities.

The expense of the administration of justice, too, may, no doubt, be
considered as laid out for the benefit of the whole society. There is no
impropriety, therefore, in its being defrayed by the general contribution of the
whole society. The persons, however, who gave occasion to this expense are those
who, by their injustice in one way or another, make it necessary to seek redress
or protection from the courts of justice. The persons again most immediately
benefited by this expense are those whom the courts of justice either restore to
their rights or maintain in their rights. The expense of the administration of
justice, therefore, may very properly be defrayed by the particular contribution
of one or other, or both, of those two different sets of persons, according as
different occasions may require, that is, by the fees of court. It cannot be
necessary to have recourse to the general contribution of the whole society,
except for the conviction of those criminals who have not themselves any estate
or fund sufficient for paying those fees.

Those local or provincial expenses of which the benefit is local or
provincial (what is laid out, for example, upon the police of a particular town
or district) ought to be defrayed by a local or provincial revenue, and ought to
be no burden upon the general revenue of the society. It is unjust that the
whole society should contribute towards an expense of which the benefit is
confined to a part of the society.

The expense of maintaining good roads and communications is, no doubt,
beneficial to the whole society, and may, therefore, without any injustice. be
defrayed by the general contribution of the whole society. This expense,
however, is most immediately and directly beneficial to those who travel or
carry goods from one place to another, and to those who consume such goods. The
turnpike tolls in England, and the duties called peages in other countries, lay
it altogether upon those two different sets of people, and thereby discharge the
general revenue of the society from a very considerable burden.

The expense of the institutions for education and religious instruction
is likewise, no doubt, beneficial to the whole society, and may, therefore,
without injustice, be defrayed by the general contribution of the whole society.
This expense, however, might perhaps with equal propriety, and even with some
advantage, be defrayed altogether by those who receive the immediate benefit of
such education and instruction, or by the voluntary contribution of those who
think they have occasion for either the one or the other.

When the institutions or public works which are beneficial to the whole
society either cannot be maintained altogether, or are not maintained altogether
by the contribution of such particular members of the society as are most
immediately benefited by them, the deficiency must in most cases be made up by
the general contribution of the whole society. The general revenue of the
society, over and above defraying the expense of defending the society, and of
supporting the dignity of the chief magistrate, must make up for the deficiency
of many particular branches of revenue. The sources of this general or public
revenue I shall endeavour to explain in the following chapter.

THE revenue which must defray, not only the expense of defending the society and
of supporting the dignity of the chief
magistrate, but all the other necessary expenses of government for which the
constitution of the state has not provided any particular revenue, may be drawn
either, first, from some fund which peculiarly belongs to the sovereign or
commonwealth, and which is independent of the revenue of the people; or,
secondly, from the revenue of the people.

PART 1

Of the Funds or Sources of
Revenue which may peculiarly belong to the Sovereign or Commonwealth

THE funds or sources of revenue which may peculiarly belong to the
sovereign or commonwealth must consist either in stock or in land.

The sovereign, like any other owner of stock, may derive a revenue from
it, either by employing it himself, or by lending it. His revenue is in the one
case profit, in the other interest.

The revenue of a Tartar or Arabian chief consists in profit. It arises
principally from the milk and increase of his own herds and flocks, of which he
himself superintends the management, and is the principal shepherd or herdsman
of his own horde or tribe. It is, however, in this earliest and rudest state of
civil government only that profit has ever made the principal part of the public
revenue of a monarchial state.

Small republics have sometimes derived a considerable revenue from the
profit of mercantile projects. The republic of Hamburg is said to do so from the
profits of a public wine cellar and apothecary's shop. The state cannot be very
great of which the sovereign has leisure to carry on the trade of a wine
merchant or apothecary. The profit of a public bank has been a source of revenue
to more considerable states. It has been so not only to Hamburg, but to Venice
and Amsterdam. A revenue of this kind has even by some people been thought not
below the attention of so great an empire as that of Great Britain. Reckoning
the ordinary dividend of the Bank of England at five and a half per cent and its
capital at ten millions seven hundred and eighty thousand pounds, the net annual
profit, after paying the expense of management, must amount, it is said, to five
hundred and ninety-two thousand nine hundred pounds. Government, it is
pretended, could borrow this capital at three per cent interest, and by taking
the management of the bank into its own hands, might make a clear profit of two
hundred and sixty-nine thousand five hundred pounds a year. The orderly,
vigilant, and parsimonious administration of such aristocracies as those of
Venice and Amsterdam is extremely proper, it appears from experience, for the
management of a mercantile project of this kind. But whether such a government
as that of England- which, whatever may be its virtues, has never been famous
for good economy; which, in time of peace, has generally conducted itself with
the slothful and negligent profusion that is perhaps natural to monarchies; and
in time of war has constantly acted with all the thoughtless extravagance that
democracies are apt to fall into- could be safely trusted with the management of
such a project, must at least be good deal more doubtful.

The post office is properly a mercantile project. The government advances
the expense of establishing the different offices, and of buying or hiring the
necessary horses or carriages, and is repaid with a large profit by the duties
upon what is carried. It is perhaps the only mercantile project which has been
successfully managed by, I believe, every sort of government. The capital to be
advanced is not very considerable. There is no mystery in the business. The
returns are not only certain, but immediate.

Princes, however, have frequently engaged in many other mercantile
projects, and have been willing, like private persons, to mend their fortunes by
becoming adventurers in the common branches of trade. They have scarce ever
succeeded. The profusion with which the affairs of princes are always managed
renders it almost impossible that they should. The agents of a prince regard the
wealth of their master as inexhaustible; are careless at what price they buy;
are careless at what price they sell; are careless at what expense they
transport his goods from one place to another. Those agents frequently live with
the profusion of princes, and sometimes too, in spite of that profusion, and by
a proper method of making up their accounts, acquire the fortunes of princes. It
was thus, as we are told by Machiavel, that the agents of Lorenzo of Medicis,
not a prince of mean abilities, carried on his trade. The republic of Florence
was several times obliged to pay the debt into which their extravagance had
involved him. He found it convenient, accordingly, to give up the business of
merchant, the business to which his family had originally owed their fortune,
and in the latter part of his life to employ both what remained of that fortune,
and the revenue of the state of which he had the disposal, in projects and
expenses more suitable to his station.

No two characters seem more inconsistent than those of trader and
sovereign. If the trading spirit of the English East India Company renders them
very bad sovereigns, the spirit of sovereignty seems to have rendered them
equally bad traders. While they were traders only they managed their trade
successfully, and were able to pay from their profits a moderate dividend to the
proprietors of their stock. Since they became sovereigns, with a revenue which,
it is said, was originally more than three millions sterling, they have been
obliged to beg extraordinary assistance of government in order to avoid
immediate bankruptcy. In their former situation, their servants in India
considered themselves as the clerks of merchants: in their present situation,
those servants consider themselves as the ministers of sovereigns.

A state may sometimes derive some part of its public revenue from the
interest of money, as well as from the profits of stock. If it has amassed a
treasure, it may lend a part of that treasure either to foreign states, or to
its own subjects.

The canton of Berne derives a considerable revenue by lending a part of
its treasure to foreign states; that is, by placing it in the public funds of
the different indebted nations of Europe, chiefly in those of France and
England. The security of this revenue must depend, first, upon the security of
the funds in which it is placed, or upon the good faith of the government which
has the management of them; and, secondly, upon the certainty or probability of
the continuance of peace with the debtor nation. In the case of a war, the very
first act of hostility, on the part of the debtor nation, might be the
forfeiture of the funds of its creditor. This policy of lending money to foreign
states is, so far as I know, peculiar to the canton of Berne.

The city of Hamburg has established a sort of public pawnshop, which
lends money to the subjects of the state upon pledges at six per cent interest.
This pawnshop or Lombard, as it is called, affords a revenue, it is pretended,
to the state of a hundred and fifty thousand crowns, which, at four and sixpence
the crown, amounts to L33,750 sterling.

The government of Pennsylvania, without amassing any treasure, invented a
method of lending, not money indeed, but what is equivalent to money, to its
subjects. By advancing to private people at interest, and upon land security to
double the value, paper bills of credit to be redeemed fifteen years after their
date, and in the meantime made transferable from hand to hand like bank notes,
and declared by act of assembly to be a legal tender in all payments from one
inhabitant of the province to another, it raised a moderate revenue, which went
a considerable way towards defraying an annual expense of about L4500, the whole
ordinary expense of that frugal and orderly government. The success of an
expedient of this kind must have depended upon three different circumstances;
first, upon the demand for some other instrument of commerce besides gold and
silver money; or upon the demand for such a quantity of consumable stock as
could not be had without sending abroad the greater part of their gold and
silver money in order to purchase it; secondly, upon the good credit of the
government which made use of this expedient; and, thirdly, upon the moderation
with which it was used, the whole value of the paper bills of credit never
exceeding that of the gold and silver money which would have been necessary for
carrying on their circulation had there been no paper bills of credit. The same
expedient was upon different occasions adopted by several other American
colonies: but, from want of this moderation, it produced, in the greater part of
them, much more disorder than conveniency.

The unstable and perishable nature of stock and credit, however, render
them unfit to be trusted to as the principal funds of that sure, steady, and
permanent revenue which can alone give security and dignity to government. The
government of no great nation that was advanced beyond the shepherd state seems
ever to have derived the greater part of its public revenue from such sources.

Land is a fund of a more stable and permanent nature; and the rent of
public lands, accordingly, has been the principal source of the public revenue
of many a great nation that was much advanced beyond the shepherd state. From
the produce or rent of the public lands, the ancient republics of Greece and
Italy derived, for a long time, the greater part of that revenue which defrayed
the necessary expenses of the commonwealth. The rent of the crown lands
constituted for a long time the greater part of the revenue of the ancient
sovereigns of Europe.

War and the preparation for war are the two circumstances which in modern
times occasion the greater part of the necessary expense of all great states.
But in the ancient republics of Greece and Italy every citizen was a soldier,
who both served and prepared himself for service at his own expense. Neither of
those two circumstances, therefore, could occasion any very considerable expense
to the state. The rent of a very moderate landed estate might be fully
sufficient for defraying all the other necessary expenses of government.

In the ancient monarchies of Europe, the manners and customs of the times
sufficiently Prepared the great body of the people for war; and when they took
the field, they were, by the condition of their feudal tenures, to be maintained
either at their own expense, or at that of their immediate lords, without
bringing any new charge upon the sovereign. The other expenses of government
were, the greater part of them, very moderate. The administration of justice, it
has been shown, instead of being a cause of expense, was a source of revenue.
The labour of the country people, for three days before and for three days after
harvest, was thought a fund sufficient for making and maintaining all the
bridges, highways, and other public works which the commerce of the country was
supposed to require. In those days the principal expense of the sovereign seems
to have consisted in the maintenance of his own family and household. The
officers of his household, accordingly, were then the great officers of state.
The lord treasurer received his rents. The lord steward and lord chamberlain
looked after the expense of his family. The care of his stables was committed to
the lord constable and the lord marshal. His houses were all built in the form
of castles, and seem to have been the principal fortresses which he possessed.
The keepers of those houses or castles might be considered as a sort of military
governors. They seem to have been the only military officers whom it was
necessary to maintain in time of peace. In these circumstances the rent of a
great landed estate might, upon ordinary occasions, very well defray all the
necessary expenses of government.

In the present state of the greater part of the civilised monarchies of
Europe, the rent of all the lands in the country, managed as they probably would
be if they all belonged to one proprietor, would scarce perhaps amount to the
ordinary revenue which they levy upon the people even in peaceable times. The
ordinary revenue of Great Britain, for example, including not only what is
necessary for defraying the current expense of the year, but for paying the
interest of the public debts, and for sinking a part of the capital of those
debts, amounts to upwards of ten millions a year. But the land-tax, at four
shillings in the pound, falls short of two millions a year. This land-tax, as it
is called, however, is supposed to be one-fifth, not only of the rent of all the
land, but of that of all the houses, and of the interest of all the capital
stock of Great Britain, that part of it only excepted which is either let to the
public, or employed as farming stock in the cultivation of land. A very
considerable part of the produce of this tax arises from the rent of houses, and
the interest of capital stock. The land-tax of the city of London, for example,
at four shillings in the pound, amounts to L123,399 6s. 7d. That of the city of
Westminster, to L63,092 1s. 5d. That of the palaces of Whitehall and St.
James's, to L30,754 6s. 3d. A certain proportion of the land-tax is in the same
manner assessed upon all the other cities and towns corporate in the kingdom,
and arises almost altogether, either from the rent of houses, or from what is
supposed to be the interest of trading and capital stock. According to the
estimation, therefore, by which Great Britain is rated to the land-tax, the
whole mass of revenue arising from the rent of all the lands, from that of all
the houses, and from the interest of all the capital stock, that part of it only
excepted which is either lent to the public, or employed in the cultivation of
land, does not exceed ten millions sterling a year, the ordinary revenue which
government levies upon the people even in peaceable times. The estimation by
which Great Britain is rated to the land-tax is, no doubt, taking the whole
kingdom at an average, very much below the real value; though in several
particular counties and districts it is said to be nearly equal to that value.
The rent of the lands alone, exclusively of that of houses, and of the interest
of stock, has by many people been estimated at twenty millions, an estimation
made in a great measure at random, and which, I apprehend, is as likely to be
above as below the truth. But if the lands of Great Britain, in the present
state of their cultivation, do not afford a rent of more than twenty millions a
year, they could not well afford the half, most probably not the fourth part of
that rent, if they all belonged to a single proprietor, and were put under the
negligent, expensive, and oppressive management of his factors and agents. The
crown lands of Great Britain do not at present afford the fourth part of the
rent which could probably be drawn from them if they were the property of
private persons. If the crown lands were more extensive, it is probable they
would be still worse managed.

The revenue which the great body of the people derives from land is in
proportion, not to the rent, but to the produce of the land. The whole annual
produce of the land of every country, if we except what is reserved for seed, is
either annually consumed by the great body of the people, or exchanged for
something else that is consumed by them. Whatever keeps down the produce of the
land below what it would otherwise rise to keeps down the revenue of the great
body of the people still more than it does that of the proprietors of land. The
rent of land, that portion of the produce which belongs to the proprietors, is
scarce anywhere in Great Britain supposed to be more than a third part of the
whole produce. If the land which in one state of cultivation affords a rent of
ten millions sterling a year would in another afford a rent of twenty millions,
the rent being, in both cases, supposed a third part of the produce, the revenue
of the proprietors would be less than it otherwise might be by ten millions a
year only; but the revenue of the great body of the people would be less than it
otherwise might be by thirty millions a year, deducting only what would be
necessary for seed. The population of the country would be less by the number of
people which thirty millions a year, deducting always the seed, could maintain
according to the particular mode of living and expense which might take place in
the different ranks of men among whom the remainder was distributed.

Though there is not at present, in Europe, any civilised state of any
kind which derives the greater part of its public revenue from the rent of lands
which are the property of the state, yet in all the great monarchies of Europe
there are still many large tracts of land which belong to the crown. They are
generally forest; and sometimes forest where, after travelling several miles,
you will scarce find a single tree; a mere waste and loss of country in respect
both of produce and population. In every great monarchy of Europe the sale of
the crown lands would produce a very large sum of money, which, if applied to
the payment of the public debts, would deliver from mortgage a much greater
revenue than any which those lands have ever afforded to the crown. In countries
where lands, improved and cultivated very highly, and yielding at the time of
sale as great a rent as can easily be got from them, commonly sell at thirty
years' purchase, the unimproved, uncultivated, and low-rented crown lands might
well be expected to sell at forty, fifty, or sixty years' purchase. The crown
might immediately enjoy the revenue which this great price would redeem from
mortgage. In the course of a few years it would probably enjoy another revenue.
When the crown lands had become private property, they would, in the course of a
few years, become well improved and well cultivated. The increase of their
produce would increase the population of the country by augmenting the revenue
and consumption of the people. But the revenue which the crown derives from the
duties of customs and excise would necessarily increase with the revenue and
consumption of the people.

The revenue which, in any civilised monarchy, the crown derives from the
crown lands, though it appears to cost nothing to individuals, in reality costs
more to the society than perhaps any other equal revenue which the crown enjoys.
It would, in all cases, be for the interest of the society to replace this
revenue to the crown by some other equal revenue, and to divide the lands among
the people, which could not well be done better, perhaps, than by exposing them
to public sale.

Lands for the purposes of pleasure and magnificence- parks, gardens,
public walks, etc., possessions which are everywhere considered as causes of
expense, not as sources of revenue- seem to be the only lands which, in a great
and civilised monarchy, ought to belong to the crown.

Public stock and public lands, therefore, the two sources of revenue
which may peculiarly belong to the sovereign or commonwealth, being both
improper and insufficient funds for defraying the necessary expense of any great
and civilised state, it remains that this expense must, the greater part of it,
be defrayed by taxes of one kind or another; the people contributing a part of
their own private revenue in order to make up a public revenue to the sovereign
or commonwealth.

PART 2

Of Taxes

THE private revenue of individuals, it has been shown in the first book
of this Inquiry, arises ultimately from three different sources: Rent, Profit,
and Wages. Every tax must finally be paid from some one or other of those three
different sorts of revenue, or from all of them indifferently. I shall endeavour
to give the best account I can, first, of those taxes which, it is intended,
should fall upon rent; secondly, of those which, it is intended, should fall
upon profit; thirdly, of those which, it is intended, should fall upon wages;
and, fourthly, of those which, it is intended, should fall indifferently upon
all those three different sources of private revenue. The particular
consideration of each of these four different sorts of taxes will divide the
second part of the present chapter into four articles, three of which will
require several other subdivisions. Many of those taxes, it will appear from the
following review, are not finally paid from the fund, or source of revenue, upon
which it was intended they should fall.

Before I enter upon the examination of particular taxes, it is necessary
to premise the four following maxims with regard to taxes in general.

I. The subjects of every state ought to contribute towards the support of
the government, as nearly as possible, in proportion to their respective
abilities; that is, in proportion to the revenue which they respectively enjoy
under the protection of the state. The expense of government to the individuals
of a great nation is like the expense of management to the joint tenants of a
great estate, who are all obliged to contribute in proportion to their
respective interests in the estate. In the observation or neglect of this maxim
consists what is called the equality or inequality of taxation. Every tax, it
must be observed once for all, which falls finally upon one only of the three
sorts of revenue above mentioned, is necessarily unequal in so far as it does
not affect the other two. In the following examination of different taxes I
shall seldom take much further notice of this sort of inequality, but shall, in
most cases, confine my observations to that inequality which is occasioned by a
particular tax falling unequally even upon that particular sort of private
revenue which is affected by it.

II. The tax which each individual is bound to pay ought to be certain,
and not arbitrary. The time of payment, the manner of payment, the quantity to
be paid, ought all to be clear and plain to the contributor, and to every other
person. Where it is otherwise, every person subject to the tax is put more or
less in the power of the tax-gathered, who can either aggravate the tax upon any
obnoxious contributor, or extort, by the terror of such aggravation, some
present or perquisite to himself. The uncertainty of taxation encourages the
insolence and favours the corruption of an order of men who are naturally
unpopular, even where they are neither insolent nor corrupt. The certainty of
what each individual ought to pay is, in taxation, a matter of so great
importance that a very considerable degree of inequality, it appears, I believe,
from the experience of all nations, is not near so great an evil as a very small
degree of uncertainty.

III. Every tax ought to be levied at the time, or in the manner, in which
it is most likely to be convenient for the contributor to pay it. A tax upon the
rent of land or of houses, payable at the same term at which such rents are
usually paid, is levied at the time when it is most likely to be convenient for
the contributor to pay; or, when he is most likely to have wherewithal to pay.
Taxes upon such consumable goods as are articles of luxury are all finally paid
by the consumer, and generally in a manner that is very convenient for him. He
pays them by little and little, as he has occasion to buy the goods. As he is at
liberty, too, either to buy, or not to buy, as he pleases, it must be his own
fault if he ever suffers any considerable inconveniency from such taxes.

IV. Every tax ought to be so contrived as both to take out and to keep
out of the pockets of the people as little as possible over and above what it
brings into the public treasury of the state. A tax may either take out or keep
out of the pockets of the people a great deal more than it brings into the
public treasury, in the four following ways. First, the levying of it may
require a great number of officers, whose salaries may eat up the greater part
of the produce of the tax, and whose perquisites may impose another additional
tax upon the people. Secondly, it may obstruct the industry the people, and
discourage them from applying to certain branches of business which might give
maintenance and unemployment to great multitudes. While it obliges the people to
pay, it may thus diminish, or perhaps destroy, some of the funds which might
enable them more easily to do so. Thirdly, by the forfeitures and other
penalties which those unfortunate individuals incur who attempt unsuccessfully
to evade the tax, it may frequently ruin them, and thereby put an end to the
benefit which the community might have received from the employment of their
capitals. An injudicious tax offers a great temptation to smuggling. But the
penalties of smuggling must rise in proportion to the temptation. The law,
contrary to all the ordinary principles of justice, first creates the
temptation, and then punishes those who yield to it; and it commonly enhances
the punishment, too, in proportion to the very circumstance which ought
certainly to alleviate it, the temptation to commit the crime. Fourthly, by
subjecting the people to the frequent visits and the odious examination of the
tax-gatherers, it may expose them to much unnecessary trouble, vexation, and
oppression; and though vexation is not, strictly speaking, expense, it is
certainly equivalent to the expense at which every man would be willing to
redeem himself from it. It is in some one or other of these four different ways
that taxes are frequently so much more burdensome to the people than they are
beneficial to the sovereign.

The evident justice and utility of the foregoing maxims have recommended
them more or less to the attention of all nations. All nations have endeavoured,
to the best of their judgment, to render their taxes as equal as they could
contrive; as certain, as convenient to the contributor, both in the time and in
the mode of payment, and, in proportion to the revenue which they brought to the
prince, as little burdensome to the people. The following short review of some
of the principal taxes which have taken place in different ages and countries
will show that the endeavours of all nations have not in this respect been
equally successful.

ARTICLE I

Taxes upon Rent. Taxes upon
the Rent of Land

A tax upon the rent of land may either every district being valued at a
certain rent, be imposed according to a certain canon, which valuation is not
afterwards to be altered, or it may be imposed in such a manner as to vary with
every variation in the real rent of the land, and to rise or fall with the
improvement or declension of its cultivation.

A land-tax which, like that of Great Britain, is assessed upon each
district according to a certain invariable canon, though it should be equal at
the time of its first establishment, necessarily becomes unequal in process of
time, according to the unequal degrees of improvement or neglect in the
cultivation of the different parts of the country. In England, the valuation
according to which the different countries and parishes were assessed to the
land-tax by the 4th of William and Mary was very unequal even at its first
establishment. This tax, therefore, so far offends against the first of the four
maxims above mentioned. It is perfectly agreeable to the other three. It is
perfectly certain. The time of payment for the tax, being the same as that for
the rent, is as convenient as it can be to the contributor though the landlord
is in all cases the real contributor, the tax is commonly advanced by the
tenant, to whom the landlord is obliged to allow it in the payment of the rent.
This tax is levied by a much smaller number of officers than any other which
affords nearly the same revenue. As the tax upon each district does not rise
with the rise of the rent, the sovereign does not share in the profits of the
landlord's improvements. Those improvements sometimes contribute, indeed, to the
discharge of the other landlords of the district. But the aggravation of the tax
which may sometimes occasion upon a particular estate is always so very small
that it never can discourage those improvements, nor keep down the produce of
the land below what it would otherwise rise to. As it has no tendency to
diminish the quantity, it can have none to raise the price of that produce. It
does not obstruct the industry of the people. It subjects the landlord to no
other inconveniency besides the unavoidable one of paying the tax.

The advantage, however, which the landlord has derived from the
invariable constancy of the valuation by which all the lands of Great Britain
are rated to the land-tax, has been principally owing to some circumstances
altogether extraneous to the nature of the tax.

It has been owing in part to the great prosperity of almost every part of
the country, the rents of almost all the estates of Great Britain having, since
the time when this valuation was first established, been continually rising, and
scarce any of them having fallen. The landlords, therefore, have almost all
gained the difference between the tax which they would have paid according to
the present rent of their estates, and that which they actually pay according to
the ancient valuation. Had the state of the country been different, had rents
been gradually falling in consequence of the declension of cultivation, the
landlords would almost all have lost this difference. In the state of things
which has happened to take place since the revolution, the constancy of the
valuation has been advantageous to the landlord and hurtful to the sovereign. In
a different state of things it might have been advantageous to the sovereign and
hurtful to the landlord.

As the tax is made payable in money, so the valuation of the land is
expressed in money. Since the establishment of this valuation the value of
silver has been pretty uniform, and there has been no alteration in the standard
of the coin either as to weight or fineness. Had silver risen considerably in
its value, as it seems to have done in the course of the two centuries which
preceded the discovery of the mines of America, the constancy of the valuation
might have proved very oppressive to the landlord. Had silver fallen
considerably in its value, as it certainly did for about a century at least
after the discovery of those mines, the same constancy of valuation would have
reduced very much this branch of the revenue of the sovereign. Had any
considerable alteration been made in the standard of the money, either by
sinking the same quantity of silver to a lower denomination, or by raising it to
a higher; had an ounce of silver, for example, instead of being coined into five
shillings and twopence, been coined either into pieces which bore so low a
denomination as two shillings and sevenpence, or into pieces which bore so high
a one as ten shillings and fourpence, it would in the one case have hurt the
revenue of the proprietor, in the other that of the sovereign.

In circumstances, therefore, somewhat different from those which have
actually taken place, this constancy of valuation might have been a very great
inconveniency, either to the contributors, or to the commonwealth. In the course
of ages such circumstances, however, must, at some time or other, happen. But
though empires, like all the other works of men, have all hitherto proved
mortal, yet every empire aims at immortality. Every constitution, therefore,
which it is meant should be as permanent as the empire itself, ought to be
convenient, not in certain circumstances only, but in all circumstances; or
ought to be suited, not to those circumstances which are transitory, occasional,
or accidental, but to those which are necessary and therefore always the same.

A tax upon the rent of land which varies with every variation of the
rent, or which rises and falls according to the improvement or neglect of
cultivation, is recommended by that sect of men of letters in France who call
themselves The Economists as the most equitable of all taxes. All taxes, they
pretend, fall ultimately upon the rent of land, and ought therefore to be
imposed equally upon the fund which must finally pay them. That all taxes ought
to fall as equally as possible upon the fund which must finally pay them is
certainly true. But without entering into the disagreeable discussion of the
metaphysical arguments by which they support their very ingenious theory, it
will sufficiently appear, from the following review, what are the taxes which
fall finally upon the rent of the land, and what are those which fall finally
upon some other fund.

In the Venetian territory all the arable lands which are given in lease
to farmers are taxed at a tenth of the rent. The leases are recorded in a public
register which is kept by the officers of revenue in each province or district.
When the proprietor cultivates his own lands, they are valued according to an
equitable estimation, and he is allowed a deduction of one-fifth of the tax, so
that for such lands he pays only eight instead of ten per cent of the supposed
rent.

A land-tax of this kind is certainly more equal than the land-tax of
England. It might not, perhaps, be altogether so certain, and the assessment of
the tax might frequently occasion a good deal more trouble to the landlord. It
might, too, be a good deal more expensive in the levying.

Such a system of administration, however, might perhaps be contrived as
would, in a great measure, both prevent this uncertainty and moderate this
expense.

The landlord and tenant, for example, might jointly be obliged to record
their lease in a public register. Proper penalties might be enacted against
concealing or misrepresenting any of the conditions; and if part of those
penalties were to be paid to either of the two parties who informed against and
convicted the other of such concealment or misrepresentation, it would
effectually deter them from combining together in order to defraud the public
revenue. All the conditions of the lease might be sufficiently known from such a
record.

Some landlords, instead of raising the rent, take a fine for the renewal
of the lease. This practice is in most cases the expedient of a spendthrift, who
for a sum of ready money sells a future revenue of much greater value. It is in
most cases, therefore, hurtful to the landlords. It is frequently hurtful to the
tenant, and it is always hurtful to the community. It frequently takes from the
tenant so great a part of his capital, and thereby diminishes so much his
ability to cultivate the land, that he finds it more difficult to pay a small
rent than it would otherwise have been to pay a great one. Whatever diminishes
his ability to cultivate, necessarily keeps down, below what it would otherwise
have been, the most important part of the revenue of the community. By rendering
the tax upon such fines a good deal heavier than upon the ordinary rent, this
hurtful practice might be discouraged, to the no small advantage of all the
different parties concerned, of the landlord, of the tenant, of the sovereign,
and of the whole community.

Some leases prescribe to the tenant a certain mode of cultivation and a
certain succession of crops during the whole continuance of the lease. This
condition, which is generally the effect of the landlord's conceit of his own
superior knowledge (a conceit in most cases very ill founded), ought always to
be considered as an additional rent; as a rent in service instead of a rent in
money. In order to discourage the practice, which is generally a foolish one,
this species of rent might be valued rather high, and consequently taxed
somewhat higher than common money rents.

Some landlords, instead of a rent in money, require a rent in kind, in
corn, cattle, poultry, wine, oil, etc.; others, again, require a rent in
service. Such rents are always more hurtful to the tenant than beneficial to the
landlord. They either take more or keep more out of the pocket of the former
than they put into that of the latter. In every country where they take place
the tenants are poor and beggarly, pretty much according to the degree in which
they take place. By valuing, in the same manner, such rents rather high, and
consequently taxing them somewhat higher than common money rents, a practice
which is hurtful to the whole community might perhaps be sufficiently
discouraged.

When the landlord chose to occupy himself a part of his own lands, the
rent might be valued according to an equitable arbitration of the farmers and
landlords in the neighbourhood, and a moderate abatement of the tax might be
granted to him, in the same manner as in the Venetian territory, provided the
rent of the lands which he occupied did not exceed a certain sum. It is of
importance that the landlord should be encouraged to cultivate a part of his own
land. His capital is generally greater than that of the tenant, and with less
skill he can frequently raise a greater produce. The landlord can afford to try
experiments, and is generally disposed to do so. His unsuccessful experiments
occasion only a moderate loss to himself. His successful ones contribute to the
improvement and better cultivation of the whole country. It might be of
importance, however, that the abatement of the tax should encourage him to
cultivate to a certain extent only. If the landlords should, the greater part of
them, be tempted to farm the whole of their own lands, the country (instead of
sober and industrious tenants, who are bound by their own interest to cultivate
as well as their capital and skill will allow them) would be filled with idle
and profligate bailiffs, whose abusive management would soon degrade the
cultivation and reduce the annual produce of the land, to the diminution, not
only of the revenue of their masters, but of the most important part of that of
the whole society.

Such a system of administration might, perhaps, free a tax of this kind
from any degree of uncertainty which could occasion either oppression or
inconveniency of the contributor; and might at the same time serve to introduce
into the common management of land such a plan or policy as might contribute a
good deal to the general improvement and good cultivation of the country.

The expense of levying a land-tax which varied with every variation of
the rent would no doubt be somewhat greater than that of levying one which was
already rated according to a fixed valuation. Some additional expense would
necessarily be incurred both by the different register offices which it would be
proper to establish in the different districts of the country, and by the
different valuations which might occasionally be made of the lands which the
proprietor chose to occupy himself. The expense of all this, however, might be
very moderate, and much below what is incurred in the levying of many other
taxes which afford a very inconsiderable revenue in comparison of what might
easily be drawn from a tax of this kind.

The discouragement which a variable land-tax of this kind might give to
the improvement of land seems to be the most important objection which can be
made to it. The landlord would certainly be less disposed to improve when the
sovereign, who contributed nothing to the expense, was to share in the profit of
the improvement. Even this objection might perhaps be obviated by allowing the
landlord, before he began his improvement, to ascertain, in conjunction with the
officers of revenue, the actual value of his lands according to the equitable
arbitration of a certain number of landlords and farmers in the neighborhood,
equally chosen by both parties, and by rating him according to this valuation
for such a number of years as might be fully sufficient for his complete
indemnification. To draw the attention of the sovereign towards the improvement
of the land, from a regard to the increase of his own revenue, is one of the
principal advantages proposed by this species of land-tax. The term, therefore,
allowed for the indemnification of the landlord ought not to be a great deal
longer than what was necessary for that purpose, lest the remoteness of the
interest should discourage too much this attention. It had better, however, be
somewhat too long than in any respect too short. No incitement to the attention
of the sovereign can ever counterbalance the smallest discouragement to that of
the landlord. The attention of the sovereign can be at best but a very general
and vague consideration of what is likely to contribute to the better
cultivation of the greater part of his dominions. The attention of the landlord
is a particular and minute consideration of what is likely to be the most
advantageous application of every inch of ground upon his estate. The principal
attention of the sovereign ought to be to encourage, by every means in his
power, the attention both of the landlord and of the farmer, by allowing both to
pursue their own interest in their own way and according to their own judgment;
by giving to both the most perfect security that they shall enjoy the full
recompense of their own industry; and by procuring to both the most extensive
market for every part of their produce, in consequence of establishing the
easiest and safest communications both by land and by water through every part
of his own dominions as well as the most unbounded freedom of exportation to the
dominions of all other princes.

If by such a system of administration a tax of this kind could be so
managed as to give, not only no discouragement, but, on the contrary, some
encouragement to the improvement of land, it does not appear likely to occasion
any other inconveniency to the landlord, except always the unavoidable one of
being obliged to pay the tax.

In all the variations of the state of the society, in the improvement and
in the declension of agriculture; in all the variations in the value of silver,
and in all those in the standard of the coin, a tax of this kind would, of its
own accord and without any attention of government, readily suit itself to the
actual situation of things, and would be equally just and equitable in all those
different changes. It would, therefore, be much more proper to be established as
a perpetual and unalterable regulation, or as what is called a fundamental law
of the commonwealth, than any tax which was always to be levied according to a
certain valuation.

Some states, instead of the simple and obvious expedient of a register of
leases, have had recourse to the laborious and expensive one of an actual survey
and valuation of all the lands in the country. They have suspected, probably,
that the lessor and lessee, in order to defraud the public revenue, might
combine to conceal the real terms of the lease. Domesday-Book seems to have been
the result of a very accurate survey of this kind.

In the ancient dominions of the King of Prussia, the land-tax is assessed
according to an actual survey and valuation, which is reviewed and altered from
time to time. According to that valuation, the lay proprietors pay from twenty
to twenty-five per cent of their revenue. Ecclesiastics from forty to forty-five
per cent. The survey and valuation of Silesia was made by order of the present
king; it is said with great accuracy. According to that valuation, the lands
belonging to the Bishop of Breslaw are taxed at twenty-five per cent of their
rent. The other revenues of the ecclesiastics of both religions, at fifty per
cent. The commanderies of the Teutonic order, and of that of Malta, at forty per
cent. Lands held by a noble tenure, at thirty-eight and one-third per cent.
Lands held by a base tenure, at thirty-five and one-third per cent.

The survey and valuation of Bohemia is said to have been the work of more
than a hundred years. It was not perfected till after the peace of 1748, by the
orders of the present empress queen. The survey of the duchy of Milan, which was
begun in the time of Charles VI, was not perfected till after 1760. It is
esteemed one of the most accurate that has ever been made. The survey of Savoy
and Piedmont was executed under the orders of the late King of Sardinia.

In the dominions of the King of Prussia the revenue of the church is
taxed much higher than that of lay proprietors. The revenue of the church is,
the greater part of it, a burden upon the rent of land. It seldom happens that
any part of it is applied towards the improvement of land, or is so employed as
to contribute in any respect towards increasing the revenue of the great body of
the people. His Prussian Majesty had probably, upon that account, thought it
reasonable that it should contribute a good deal more towards relieving the
exigencies of the state. In some countries the lands of the church are exempted
from all taxes. In others they are taxed more lightly than other lands. In the
duchy of Milan, the lands which the church possessed before 1575 are rated to
the tax at a third only of their value.

In Silesia, lands held by a noble tenure are taxed three per cent higher
than those held by a base tenure. The honours and privileges of different kinds
annexed to the former, his Prussian Majesty had probably imagined, would
sufficiently compensate to the proprietor a small aggravation of the tax; while
at the same time the humiliating inferiority of the latter would be in some
measure alleviated by being taxed somewhat more lightly. In other countries, the
system of taxation, instead of alleviating, aggravates this inequality. In the
dominions of the King of Sardinia, and in those provinces of France which are
subject to what is called the real or predial taille, the tax falls altogether
upon the lands held by a base tenure. Those held by a noble one are exempted.

A land-tax assessed according to a general survey and valuation, how
equal soever it may be at first, must, in the course of a very moderate period
of time, become unequal. To prevent its becoming so would require the continual
and painful attention of government to all the variations in the state and
produce of every different farm in the country. The governments of Prussia, of
Bohemia, of Sardinia, and of the duchy of Milan actually exert an attention of
this kind; an attention so unsuitable to the nature of government that it is not
likely to be of long continuance, and which, if it is continued, will probably
in the long-run occasion much more trouble and vexation than it can possibly
bring relief to the contributors.

In 1666, the generality of Montauban was assessed to the real or predial
taille according, it is said, to a very exact survey and valuation. By 1727,
this assessment had become altogether unequal. In order to remedy this
inconveniency, government has found no better expedient than to impose upon the
whole generality an additional tax of a hundred and twenty thousand livres. This
additional tax is rated upon all the different districts subject to the taille
according to the old assessment. But it is levied only upon those which in the
actual state of things are by that assessment undertaxed, and it is applied to
the relief of those which by the same assessment are overtaxed. Two districts,
for example, one of which ought in the actual state of things to be taxed at
nine hundred, the other at eleven hundred livres, are by the old assessment both
taxed at a thousand livres. Both these districts are by the additional tax rated
at eleven hundred livres each. But this additional tax is levied only upon the
district undercharged, and it is applied altogether to the relief of that
overcharged, which consequently pays only nine hundred livres. The government
neither gains nor loses by the additional tax, which is applied altogether to
remedy the inequalities arising from the old assessment. The application is
pretty much regulated according to the discretion of the intendant of the
generality, and must, therefore, be in a great measure arbitrary.

Taxes which are proportioned, not to the Rent, but to the Produce of Land

Taxes upon the produce of land are in reality taxes upon the rent; and
though they may be originally advanced by the farmer, are finally paid by the
landlord. When a certain portion of the produce is to be paid away for a tax,
the farmer computes, as well as he can, what the value of this portion is, one
year with another, likely to amount to, and he makes a proportionable abatement
in the rent which he agrees to pay to the landlord. There is no farmer who does
not compute beforehand what the church tithe, which is a land-tax of this kind,
is, one year with another, likely to amount to.

The tithe, and every other land-tax of this kind, under the appearance of
perfect equality, are very unequal taxes; a certain portion of the produce
being, in different situations, equivalent to a very different portion of the
rent. In some very rich lands the produce is so great that the one half of it is
fully sufficient to replace to the farmer his capital employed in cultivation,
together with the ordinary profits of farming stock in the neighbourhood. The
other half, or, what comes to the same thing, the value of the other half, he
could afford to pay as rent to the landlord, if there was no tithe. But if a
tenth of the produce is taken from him in the way of tithe, he must require an
abatement of the fifth part of his rent, otherwise he cannot get back his
capital with the ordinary profit. In this case the rent of the landlord, instead
of amounting to a half or five-tenths of the whole produce, will amount only to
four-tenths of it. In poorer lands, on the contrary, the produce is sometimes so
small, and the expense of cultivation so great, that it requires four-fifths of
the whole produce to replace to the farmer his capital with the ordinary profit.
In this case, though there was no tithe, the rent of the landlord could amount
to no more than one-fifth or two-tenths of the whole produce. But if the farmer
pays one-tenth of the produce in the way of tithe, he must require an equal
abatement of the rent of the landlord, which will thus be reduced to one-tenth
only of the whole produce. Upon the rent of rich lands, the tithe may sometimes
be a tax of no more than one-fifth part, or four shillings in the pound; whereas
upon that of poorer lands, it may sometimes be a tax of one-half, or of ten
shillings in the pound.

The tithe, as it is frequently a very unequal tax upon the rent, so it is
always a great discouragement both to the improvements of the landlord and to
the cultivation of the farmer. The one cannot venture to make the most
important, which are generally the most expensive improvements, nor the other to
raise the most valuable, which are generally too the most expensive crops, when
the church, which lays out no part of the expense, is to share so very largely
in the profit. The cultivation of madder was for a long time confined by the
tithe to the United Provinces, which, being Presbyterian countries, and upon
that account exempted from this destructive tax, enjoyed a sort of monopoly of
that useful dyeing drug against the rest of Europe. The late attempts to
introduce the culture of this plant into England have been made only in
consequence of the statute which enacted that five shillings an acre should be
received in lieu of all manner of tithe upon madder.

As through the greater part of Europe the church, so in many different
countries of Asia the state, is principally supported by a land-tax,
proportioned, not to the rent, but to the produce of the land. In China, the
principal revenue of the sovereign consists in a tenth part of the produce of
all lands of the empire. This tenth part, however, is estimated so very
moderately that, in many provinces, it is said not to exceed a thirtieth part of
the ordinary produce. The land-tax or land-rent which used to be paid to the
Mahometan government of Bengal, before that country fell into the hands of the
English East India Company, is said to have amounted to about a fifth part of
the produce. The land-tax of ancient Egypt is said likewise to have amounted to
a fifth part.

In Asia, this sort of land-tax is said to interest the sovereign in the
improvement and cultivation of land. The sovereigns of China, those of Bengal
while under the Mahometan government, and those of ancient Egypt, are said
accordingly to have been extremely attentive to the making and maintaining of
good roads and navigable canals, in order to increase, as much as possible, both
the quantity and value of every part of the produce of the land, by procuring to
every part of it the most extensive market which their own dominions could
afford. The tithe of the church is divided into such small portions that no one
of its proprietors can have any interest of this kind. The parson of a parish
could never find his account in making a road or canal to a distant part of the
country, in order to extend the market for the produce of his own particular
parish. Such taxes, when destined for the maintenance of the state, have some
advantages which may serve in some measure to balance their inconveniency. When
destined for the maintenance of the church, they are attended with nothing but
inconveniency.

Taxes upon the produce of land may be levied either in kind, or,
according to a certain valuation, in money.

The parson of a parish, or a gentleman of small fortune who lives upon
his estate, may sometimes, perhaps, find some advantage in receiving, the one
his tithe, and the other his rent, in kind. The quantity to be collected, and
the district within which it is to be collected, are so small that they both can
oversee, with their own eyes, the collection and disposal of every part of what
is due to them. A gentleman of great fortune, who lived in the capital, would be
in danger of suffering much by the neglect, and more by the fraud of his factors
and agents, if the rents of an estate in a distant province were to be paid to
him in this manner. The loss of the sovereign from the abuse and depredation of
his tax-gatherers would necessarily be much greater. The servants of the most
careless private person are, perhaps, more under the eye of their master than
those of the most careful prince; and a public revenue which was paid in kind
would suffer so much from the mismanagement of the collectors that a very small
part of what was levied upon the people would ever arrive at the treasury of the
prince. Some part of the public revenue of China, however, is said to be paid in
this manner. The mandarins and other tax-gatherers will, no doubt, find their
advantage in continuing the practice of a payment which is so much more liable
to abuse than any payment in money.

A tax upon the produce of land which is levied in money may be levied
either according to a valuation which varies with all the variations of the
market price, or according to a fixed valuation, a bushel of wheat, for example,
being always valued at one and the same money price, whatever may be the state
of the market. The produce of a tax levied in the former way will vary only
according to the variations in the real produce of the land, according to the
improvement or neglect of cultivation. The produce of a tax levied in the latter
way will vary, not only according to the variations in the produce of the land,
but according to both those in the value of the precious metals and those in the
quantity of those metals which is at different times contained in coin of the
same denomination. The produce of the former will always bear the same
proportion to the value of the real produce of the land. The produce of the
latter may, at different times, bear very different proportions to that value.

When, instead either of a certain portion of the produce of land, or of
the price of a certain portion, a certain sum of money is to be paid in full
compensation for all tax or tithe, the tax becomes, in this case, exactly of the
same nature with the land-tax of England. It neither rises nor falls with the
rent of the land. It neither encourages nor discourages improvement. The tithe
in the greater part of those parishes which pay what is called a Modus in lieu
of all other tithe is a tax of this kind. During the Mahometan government of
Bengal, instead of the payment in kind of a fifth part of the produce, a modus,
and, it is said, a very moderate one, was established in the greater part of the
districts or zemindaries of the country. Some of the servants of the East India
Company, under pretence of restoring the public revenue to its proper value,
have, in some provinces, exchanged this modus for a payment in kind. Under their
management this change is likely both to discourage cultivation, and to give new
opportunities for abuse in the collection of the public revenue which has fallen
very much below what it was said to have been when it first fell under the
management of the company. The servants of the company may, perhaps, have
profited by this change, but at the expense, it is probable, both of their
masters and of the country.

Taxes upon the Rent
of House.

The rent of a house may be distinguished into two parts, of which the one
may very properly be called the Building-rent; the other is commonly called the
Ground-rent.

The building-rent is the interest or profit of the capital expended in
building the house. In order to put the trade of a builder upon a level with
other trades, it is necessary that this rent should be sufficient, first, to pay
him the same interest which he would have got for his capital if he had lent it
upon good security; and, secondly, to keep the house in constant repair, or,
what comes to the same thing, to replace, within a certain term of years, the
capital which had been employed in building it. The building-rent, or the
ordinary profit of building, is, therefore, everywhere regulated by the ordinary
interest of money. Where the market rate of interest is four per cent the rent
of a house which, over and above paying the ground-rent, affords six or six and
a half per cent upon the whole expense of building, may perhaps afford a
sufficient profit to the builder. Where the market rate of interest is five per
cent, it may perhaps require seven or seven and a half per cent. If, in
proportion to the interest of money, the trade of the builder affords at any
time a much greater profit than this, it will soon draw so much capital from
other trades as will reduce the profit to its proper level. If it affords at any
time much less than this, other trades will soon draw so much capital from it as
will again raise that profit.

Whatever part of the whole rent of a house is over and above what is
sufficient for affording this reasonable profit naturally goes to the
ground-rent; and where the owner of the ground and the owner of the building are
two different persons, is, in most cases, completely paid to the former. This
surplus rent is the price which the inhabitant of the house pays for some real
or supposed advantage of the situation. In country houses at a distance from any
great town, where there is plenty of ground to choose upon, the ground-rent is
scarce anything, or no more than what the ground which the house stands upon
would pay if employed in agriculture. In country villas in the neighborhood of
some great town, it is sometimes a good deal higher, and the peculiar
conveniency or beauty of situation is there frequently very well paid for.
Ground-rents are generally highest in the capital, and in those particular parts
of it where there happens to be the greatest demand for houses, whatever be the
reason of that demand, whether for trade and business, for pleasure and society,
or for mere vanity and fashion.

A tax upon house-rent, payable by the tenant and proportioned to the
whole rent of each house, could not, for any considerable time at least, affect
the building-rent. If the builder did not get his reasonable profit, he would be
obliged to quit the trade; which, by raising the demand for building, would in a
short time bring back his profit to its proper level with that of other trades.
Neither would such a tax fall altogether upon the ground-rent; but it would
divide itself in such a manner as to fall partly upon the inhabitant of the
house, and partly upon the owner of the ground.

Let us suppose, for example, that a particular person judges that he can
afford for house-rent an expense of sixty pounds a year; and let us suppose,
too, that a tax of four shillings in the pound, or of one-fifth, payable by the
inhabitant, is laid upon house-rent. A house of sixty pounds rent will in this
case cost him seventy-two pounds a year, which is twelve pounds more than he
thinks he can afford. He will, therefore, content himself with a worse house, or
a house of fifty pounds rent, which, with the additional ten pounds that he must
pay for the tax, will make up the sum of sixty pounds a year, the expense which
he judges he can afford; and in order to pay the tax he will give up a part of
the additional conveniency which he might have had from a house of ten pounds a
year more rent. He will give up, I say, a part of this additional conveniency;
for he will seldom be obliged to give up the whole, but will, in consequence of
the tax, get a better house for fifty pounds a year than he could have got if
there had been no tax. For as a tax of this kind by taking away this particular
competitor, must diminish the competition for houses of sixty pounds rent, so it
must likewise diminish it for those of fifty pounds rent, and in the same manner
for those of all other rents, except the lowest rent, for which it would for
some time increase the competition. But the rents of every class of houses for
which the competition was diminished would necessarily be more or less reduced.
As no part of this reduction, however, could, for any considerable time at
least, affect the building-rent, the whole of it must in the long-run
necessarily fall upon the ground-rent. The final payment of this tax, therefore,
would fall partly upon the inhabitant of the house, who, in order to pay his
share, would be obliged to give up a part of his conveniency, and partly upon
the owner of the ground, who, in order to pay his share, would be obliged to
give up a part of his revenue. In what proportion this final payment would be
divided between them it is not perhaps very easy to ascertain. The division
would probably be very different in different circumstances, and a tax of this
kind might, according to those different circumstances, affect very unequally
both the inhabitant of the house and the owner of the ground.

The inequality with which a tax of this kind might fall upon the owners
of different ground-rents would arise altogether from the accidental inequality
of this division. But the inequality with which it might fall upon the
inhabitants of different houses would arise not only from this, but from another
cause. The proportion of the expense of house-rent to the whole expense of
living is different in the different degrees of fortune. It is perhaps highest
in the highest degree, and it diminishes gradually through the inferior degrees,
so as in general to be lowest in the lowest degree. The necessaries of life
occasion the great expense of the poor. They find it difficult to get food, and
the greater part of their little revenue is spent in getting it. The luxuries
and vanities of life occasion the principal expense of the rich, and a
magnificent house embellishes and sets off to the best advantage all the other
luxuries and vanities which they possess. A tax upon house-rents, therefore,
would in general fall heaviest upon the rich; and in this sort of inequality
there would not, perhaps, be anything very unreasonable. It is not very
unreasonable that the rich should contribute to the public expense, not only in
proportion to their revenue, but something more than in that proportion.

The rent of houses, though it in some respects resembles the rent of
land, is in one respect essentially different from it. The rent of land is paid
for the use of a productive subject. The land which pays it produces it. The
rent of houses is paid for the use of an unproductive subject. Neither the house
nor the ground which it stands upon produce anything. The person who pays the
rent, therefore, must draw it from some other source of revenue distinct from
the independent of this subject. A tax upon the rent of houses, so far as it
falls upon the inhabitants, must be drawn from the same source as the rent
itself, and must be paid from their revenue, whether derived from the wages of
labour, the profits of stock, or the rent of land. So far as it falls upon the
inhabitants, it is one of those taxes which fall, not upon one only, but
indifferently upon all the three different sources of revenue, and is in every
respect of the same nature as a tax upon any other sort of consumable
commodities. In general there is not, perhaps, any one article of expense or
consumption by which the liberality or narrowness of a man's whole expense can
be better judged of than by his house-rent. A proportional tax upon this
particular article of expense might, perhaps, produce a more considerable
revenue than any which has hitherto been drawn from it in any part of Europe. If
the tax indeed was very high, the greater part of people would endeavour to
evade it, as much as they could, by contenting themselves with smaller houses,
and by turning the greater part of their expense into some other channel.

The rent of houses might easily be ascertained with sufficient accuracy
by a policy of the same kind with that which would be necessary for ascertaining
the ordinary rent of land. Houses not inhabited ought to pay no tax. A tax upon
them would fall altogether upon the proprietor, who would thus be taxed for a
subject which afforded him neither conveniency nor revenue. Houses inhabited by
the proprietor ought to be rated, not according to the expense which they might
have cost in building, but according to the rent which an equitable arbitration
might judge them likely to bring if leased to a tenant. If rated according to
the expense which they may have cost in building, a tax of three or four
shillings in the pound, joined with other taxes, would ruin almost all the rich
and great families of this, and, I believe, of every other civilised country.
Whoever will examine, with attention, the different town and country houses of
some of the richest and greatest families in this country will find that, at the
rate of only six and a half or seven per cent upon the original expense of
building, their house-rent is nearly equal to the whole net rent of their
estates. It is the accumulated expense of several successive generations, laid
out upon objects of great beauty and magnificance, indeed; but, in proportion to
what they cost, of very small exchangeable value.

Ground-rents are a still more proper subject of taxation than the rent of
houses. A tax upon ground-rents would not raise the rents of houses. It would
fall altogether upon the owner of the ground-rent, who acts always as a
monopolist, and exacts the greatest rent which can be got for the use of his
ground. More or less can be got for it according as the competitors happen to be
richer or poorer, or can afford to gratify their fancy for a particular spot of
ground at a greater or smaller expense. In every country the greatest number of
rich competitors is in the capital, and it is there accordingly that the highest
ground-rents are always to be found. As the wealth of those competitors would in
no respect be increased by a tax upon ground-rents, they would not probably be
disposed to pay more for the use of the ground. Whether the tax was to be
advanced by the inhabitant, or by the owner of the ground, would be of little
importance. The more the inhabitant was obliged to pay for the tax, the less he
would incline to pay for the ground; so that the final payment of the tax would
fall altogether upon the owner of the ground-rent. The ground-rents of
uninhabited houses ought to pay no tax.

Both ground-rents and the ordinary rent of land are a species of revenue
which the owner, in many cases, enjoys without any care or attention of his own.
Though a part of this revenue should be taken from him in order to defray the
expenses of the state, no discouragement will thereby be given to any sort of
industry. The annual produce of the land and labour of the society, the real
wealth and revenue of the great body of the people, might be the same after such
a tax as before. Ground-rents and the ordinary rent of land are, therefore,
perhaps, the species of revenue which can best bear to have a peculiar tax
imposed upon them.

Ground-rents seem, in this respect, a more proper subject of peculiar
taxation than even the ordinary rent of land. The ordinary rent of land is, in
many cases, owing partly at least to the attention and good management of the
landlord. A very heavy tax might discourage too, much this attention and good
management. Ground-rents, so far as they exceed the ordinary rent of land, are
altogether owing to the good government of the sovereign, which, by protecting
the industry either of the whole people, or of the inhabitants of some
particular place, enables them to pay so much more than its real value for the
ground which they build their houses upon; or to make to its owner so much more
than compensation for the loss which he might sustain by this use of it. Nothing
can be more reasonable than that a fund which owes its existence to the good
government of the state should be taxed peculiarly, or should contribute
something more than the greater part of other funds, towards the support of that
government.

Though, in many different countries of Europe, taxes have been imposed
upon the rent of houses, I do not know of any in which ground-rents have been
considered as a separate subject of taxation. The contrivers of taxes have,
probably, found some difficulty in ascertaining what part of the rent ought to
be considered as ground-rent, and what part ought to be considered as
building-rent. It should not, however, seem very difficult to distinguish those
two parts of the rent from one another.

In Great Britain the rent of houses is supposed to be taxed in the same
proportion as the rent of land by what is called the annual land-tax. The
valuation, according to which each different parish and district is assessed to
this tax, is always the same. It was originally extremely unequal, and it still
continues to be so. Through the greater part of the kingdom this tax falls still
more lightly upon the rent of houses than upon that of land. In some few
districts only, which were originally rated high, and in which the rents of
houses have fallen considerably, the land-tax of three or four shillings in the
pound is said to amount to an equal proportion of the real rent of houses.
Untenanted houses, though by law subject to the tax, are, in most districts,
exempted from it by the favour of the assessors; and this exemption sometimes
occasions some little variation in the rate of particular houses, though that of
the district is always the same. Improvements of rent, by new buildings,
repairs, etc., go to the discharge of the district, which occasions still
further variations in the rate of particular houses.

In the province of Holland every house is taxed at two and a half per
cent of its value, without any regard either to the rent which it actually pays,
or to the circumstances of its being tenanted or untenanted. There seems to be a
hardship in obliging the proprietor to pay a tax for an untenanted house, from
which he can derive no revenue, especially so very heavy a tax. In Holland,
where the market rate of interest does not exceed three per cent, two and a half
per cent upon the whole value of the house must, in most cases, amount to more
than a third of the building-rent, perhaps of the whole rent. The valuation,
indeed, according to which the houses are rated, though very unequal, is said to
be always below the real value. When a house is rebuilt, improved, or enlarged,
there is a new valuation, and the tax is rated accordingly.

The contrivers of the several taxes which in England have, at different
times, been imposed upon houses, seem to have imagined that there was some great
difficulty in ascertaining, with tolerable exactness, what was the real rent of
every house. They have regulated their taxes, therefore, according to some more
obvious circumstances, such as they had probably imagined would, in most cases,
bear some proportion to the rent.

The first tax of this kind was hearth-money, or a tax of two shillings
upon every hearth. In order to ascertain how many hearths were in the house, it
was necessary that the tax-gatherer should enter every room in it. This odious
visit rendered the tax odious. Soon after the revolution, therefore, it was
abolished as a badge of slavery.

The next tax of this kind was a tax of two shillings upon every
dwelling-house inhabited. A house with ten windows to pay four shillings more. A
house with twenty windows and upwards to pay eight shillings. This tax was
afterwards so far altered that houses with twenty windows, and with less than
thirty, were ordered to pay ten shillings, and those with thirty windows and
upwards to pay twenty shillings. The number of windows can, in most cases, be
counted from the outside, and, in all cases, without entering every room in the
house. The visit of the tax-gatherer, therefore, was less offensive in this tax
than in the hearth-money.

This tax was afterwards repealed, and in the room of it was established
the window-tax, which has undergone, too, several alterations and augmentations.
The window-tax, as it stands at present (January 1775), over and above the duty
of three shillings upon every house in England, and of one shilling upon every
house in Scotland, lays a duty upon every window, which, in England, augments
gradually from twopence, the lowest rate, upon houses with not more than seven
windows, to two shillings, the highest rate, upon houses with twenty-five
windows and upwards.

The principal objection to all such taxes of the worst is their
inequality, an inequality of the worst kind, as they must frequently fall much
heavier upon the poor than upon the rich. A house of ten pounds rent in a
country town may sometimes have more windows than a house of five hundred pounds
rent in London; and though the inhabitant of the former is likely to be a much
poorer man than that of the latter, yet so far as his contribution is regulated
by the window-tax, he must contribute more to the support of the state. Such
taxes are, therefore, directly contrary to the first of the four maxims above
mentioned. They do not seem to offend much against any of the other three.

The natural tendency of the window-tax, and of all other taxes upon
houses, is to lower rents. The more a man pays for the tax, the less, it is
evident, he can afford to pay for the rent. Since the imposition of the
window-tax, however, the rents of houses have upon the whole risen, more or
less, in almost every town and village of Great Britain with which I am
acquainted. Such has been almost everywhere the increase of the demand for
houses, that it has raised the rents more than the window-tax could sink them;
one of the many proofs of the great prosperity of the country, and of the
increasing revenue of its inhabitants. Had it not been for the tax, rents would
probably have risen still higher.

ARTICLE II

Taxes on Profit, or upon
the Revenue arising from Stock

The revenue or profit arising from stock naturally divides itself into
two parts; that which pays the interest, and which belongs to the owner of the
stock, and that surplus part which is over and above what is necessary for
paying the interest.

This latter part of profit is evidently a subject not taxable directly.
It is the compensation, and in most cases it is no more than a very moderate
compensation, for the risk and trouble of employing the stock. The employer must
have this compensation, otherwise he cannot, consistently with his own interest,
continue the employment. If he was taxed directly, therefore, in proportion to
the whole profit, he would be obliged either to raise the rate of his profit, or
to charge the tax upon the interest of money; that is, to pay less interest. If
he raised the rate of his profit in proportion to the tax, the whole tax, though
it might be advanced by him, would be finally paid by one or other of two
different sets of people, according to the different ways in which he might
employ the stock of which he had the management. If he employed it as a farming
stock in the cultivation of land, he could raise the rate of his profit only by
retaining a greater portion, or, what comes to the same thing, the price of a
greater portion of the produce of the land; and as this could be done only by a
reduction of rent, the final payment of the tax would fall upon the landlord. If
he employed it as a mercantile or manufacturing stock, he could raise the rate
of his profit only by raising the price of his goods; in which case the final
payment of the tax would fall altogether upon the consumers of those goods. If
he did not raise the rate of his profit, he would be obliged to charge the whole
tax upon that part of it which was allotted for the interest of money. He could
afford less interest for whatever stock he borrowed, and the whole weight of the
tax would in this case fall ultimately upon the interest of money. So far as he
could not relieve himself from the tax in the one way, he would be obliged to
relieve himself in the other.

The interest of money seems at first sight a subject equally capable of
being taxed directly as the rent of land. Like the rent of land, it is a net
produce which remains after completely compensating the whole risk and trouble
of employing the stock. As a tax upon the rent of land cannot raise rents;
because the net produce which remains after replacing the stock of the farmer,
together with his reasonable profit, cannot be greater after the tax than before
it, so, for the same reason, a tax upon the interest of money could not raise
the rate of interest; the quantity of stock or money in the country, like the
quantity of land, being supposed to remain the same after the tax as before it.
The ordinary rate of profit, it has been shown in the first book, is everywhere
regulated by the quantity of stock to be employed in proportion to the quantity
of the employment, or of the business which must be done by it. But the quantity
of the employment, or of the business to be done by stock, could neither be
increased nor diminished by any tax upon the interest of money. If the quantity
of the stock to be employed, therefore, was neither increased nor diminished by
it, the ordinary rate of profit would necessarily remain the same. But the
portion of this profit necessary for compensating the risk and trouble of the
employer would likewise remain the same, that risk and trouble being in no
respect altered. The residue, therefore, that portion which belongs to the owner
of the stock, and which pays the interest of money, would necessarily remain the
same too. At first sight, therefore, the interest of money seems to be a subject
as fit to be taxed directly as the rent of land.

There are, however, two different circumstances which render the interest
of money a much less proper subject of direct taxation than the rent of land.

First, the quantity and value of the land which any man possesses can
never be a secret, and can always be ascertained with great exactness. But the
whole amount of the capital stock which he possesses is almost always a secret,
and can scarce ever be ascertained with tolerable exactness. It is liable,
besides, to almost continual variations. A year seldom passes away, frequently
not a month, sometimes scarce a single day, in which it does not rise or fall
more or less. An inquisition into every man's private circumstances, and an
inquisition which, in order to accommodate the tax to them, watched over all the
fluctuations of his fortunes, would be a source of such continual and endless
vexation as no people could support.

Secondly, land is a subject which cannot be removed; whereas stock easily
may. The proprietor of land is necessarily a citizen of the particular country
in which his estate lies. The proprietor of stock is properly a citizen of the
world, and is not necessarily attached to any particular country. He would be
apt to abandon the country in which he was exposed to a vexatious inquisition,
in order to be assessed to a burdensome tax, and would remove his stock to some
other country where he could either carry on his business, or enjoy his fortune
more at his ease. By removing his stock he would put an end to all the industry
which it had maintained in the country which he left. Stock cultivates land;
stock employs labour. A tax which tended to drive away stock from any particular
country would so far tend to dry up every source of revenue both to the
sovereign and to the society. Not only the profits of stock, but the rent of
land and the wages of labour would necessarily be more or less diminished by its
removal.

The nations, accordingly, who have attempted to tax the revenue arising
from stock, instead of any severe inquisition of this kind, have been obliged to
content themselves with some very loose, and, therefore, more or less arbitrary,
estimation. The extreme inequality and uncertainty of a tax assessed in this
manner can be compensated only by its extreme moderation, in consequence of
which every man finds himself rated so very much below his real revenue that he
gives himself little disturbance though his neighbour should be rated somewhat
lower.

By what is called the land-tax in England, it was intended that stock
should be taxed in the same proportion as land. When the tax upon land was at
four shillings in the pound, or at one-fifth of the supposed rent, it was
intended that stock should be taxed at one-fifth of the supposed interest. When
the present annual land-tax was first imposed, the legal rate of interest was
six per cent. Every hundred pounds stock, accordingly, was supposed to be taxed
at twenty-four shillings, the fifth part of six pounds. Since the legal rate of
interest has been reduced to five per cent every hundred pounds stock is
supposed to be taxed at twenty shillings only. The sum to be raised by what is
called the land-tax was divided between the country and the principal towns. The
greater part of it was laid upon the country; and of what was laid upon the
towns, the greater part was assessed upon the houses. What remained to be
assessed upon the stock or trade of the towns (for the stock upon the land was
not meant to be taxed) was very much below the real value of that stock or
trade. Whatever inequalities, therefore, there might be in the original
assessment gave little disturbance. Every parish and district still continues to
be rated for its land, its houses, and its stock, according to the original
assessment; and the almost universal prosperity of the country, which in most
places has raised very much the value of all these, has rendered those
inequalities of still less importance now. The rate, too, upon each district
continuing always the same, the uncertainty of this tax so far as it might be
assessed upon the stock of any individual, has been very much diminished, as
well as rendered of much less consequence. If the greater part of the lands of
England are not rated to the land-tax at half their actual value, the greater
part of the stock of England is, perhaps, scarce rated at the fiftieth part of
its actual value. In some towns the whole land-tax is assessed upon houses, as
in Westminster, where stock and trade are free. It is otherwise in London.

In all countries a severe inquisition into the circumstances of private
persons has been carefully avoided.

At Hamburg every inhabitant is obliged to pay to the state one-fourth per
cent of all that he possesses; and as the wealth of the people of Hamburg
consists principally in stock, this tax may be considered as a tax upon stock.
Every man assesses himself, and, in the presence of the magistrate, puts
annually into the public coffer a certain sum of money which he declares upon
oath to be one-fourth per cent of all that he possesses, but without declaring
what it amounts to, or being liable to any examination upon that subject. This
tax is generally supposed to be paid with great fidelity. In a small republic,
where the people have entire confidence in their magistrates, are convinced of
the necessity of the tax for the support of the state, and believe that it will
be faithfully applied to that purpose, such conscientious and voluntary payment
may sometimes be expected. It is not peculiar to the people of Hamburg.

The canton of Unterwald in Switzerland is frequently ravaged by storms
and inundations, and is thereby exposed to extraordinary expenses. Upon such
occasions the people assemble, and every one is said to declare with the
greatest frankness what he is worth in order to be taxed accordingly. At Zurich
the law orders that, in cases of necessity, every one should be taxed in
proportion to his revenue- the amount of which he is obliged to declare upon
oath. They have no suspicion, it is said, that any of their fellow-citizens will
deceive them. At Basel the principal revenue of the state arises from a small
custom upon goods exported. All the citizens make oath that they will pay every
three months all the taxes imposed by the law. All merchants and even all
innkeepers are trusted with keeping themselves the account of the goods which
they sell either within or without the territory. At the end of every three
months they send this account to the treasurer with the amount of the tax
computed at the bottom of it. It is not suspected that the revenue suffers by
this confidence.

To oblige every citizen to declare publicly upon oath the amount of his
fortune must not, it seems, in those Swiss cantons be reckoned a hardship. At
Hamburg it would be reckoned the greatest. Merchants engaged in the hazardous
protects of trade all tremble at the thoughts of being obliged at all to expose
the real state of their circumstances. The ruin of their credit and the
miscarriage of their projects, they foresee, would too often be the consequence.
A sober and parsimonious people, who are strangers to all such projects, do not
feel that they have occasion for any such concealment.

In Holland, soon after the exaltation of the late Prince of Orange to the
stadtholdership, a tax of two per cent, or the fiftieth penny, as it was called,
was imposed upon the whole substance of every citizen. Every citizen assessed
himself and paid his tax in the same manner as at Hamburg, and it was in general
supposed to have been paid with great fidelity. The people had at that time the
greatest affection for their new government, which they had just established by
a general insurrection. The tax was to be paid but once, in order to relieve the
state in a particular exigency. It was, indeed, too heavy to be permanent. In a
country where the market rate of interest seldom exceeds three per cent, a tax
of two per cent amounts to thirteen shillings and fourpence in the pound upon
the highest net revenue which is commonly drawn from stock. It is a tax which
very few people could pay without encroaching more or less upon their capitals.
In a particular exigency the people may, from great public zeal, make a great
effort, and give up even a part of their capital in order to relieve the state.
But it is impossible that they should continue to do so for any considerable
time; and if they did, the tax would ruin them so completely as to render them
altogether incapable of supporting the state.

The tax upon stock imposed by the Land-tax Bill in England, though it is
proportioned to the capital, is not intended to diminish or take away any part
of that capital. It is meant only to be a tax upon the interest of money
proportioned to that upon the rent of land, so that when the latter is at four
shillings in the pound, the former may be at four shillings in the pound too.
The tax at Hamburg and the still more moderate tax of Unterwald and Zurich are
meant, in the same manner, to be taxes, not upon the capital, but upon the
interest or net revenue of stock. That of Holland was meant to be a tax upon the
capital.

Taxes upon as Profit of particular Employments

In some countries extraordinary taxes are imposed upon the profits of
stock, sometimes when employed in particular branches of trade, and sometimes
when employed in agriculture.

Of the former kind are in England the tax upon hawkers and pedlars, that
upon hackney coaches and chairs, and that which the keepers of ale-houses pay
for a licence to retail ale and spirituous liquors. During the late war, another
tax of the same kind was proposed upon shops. The war having been undertaken, it
was said, in defence of the trade of the country, the merchants, who were to
profit by it, ought to contribute towards the support of it.

A tax, however, upon the profits of stock employed in any particular
branch of trade can never fall finally upon the dealers (who must in all
ordinary cases have their reasonable profit, and where the competition is free
can seldom have more than that profit), but always upon the consumers, who must
be obliged to pay in the price of the goods the tax which the dealer advances;
and generally with some overcharge.

A tax of this kind when it is proportioned to the trade of the dealer is
finally paid by the consumer, and occasions no oppression to the dealer. When it
is not so proportioned, but is the same upon all dealers, though in this case,
too, it is finally paid by the consumer, yet it favours the great, and occasions
some oppression to the small dealer. The tax of five shillings a week upon every
hackney coach, and that of ten shillings a year upon every hackney chair, so far
as it is advanced by the different keepers of such coaches and chairs, is
exactly enough proportioned to the extent of their respective dealings. It
neither favours the great, nor oppresses the smaller dealer. The tax of twenty
shillings a year for a licence to sell ale; of forty shillings for a licence to
sell spirituous liquors; and of forty shillings more for a licence to sell wine,
being the same upon all retailers, must necessarily give some advantage to the
great, and occasion some oppression to the small dealers. The former must find
it more easy to get back the tax in the price of their goods than the latter.
The moderation of the tax, however, renders this inequality of less importance,
and it may to many people appear not improper to give some discouragement to the
multiplication of little ale-houses. The tax upon shops, it was intended, should
be the same upon all shops. It could not well have been otherwise. It would have
been impossible to proportion with tolerable exactness the tax upon a shop to
the extent of the trade carried on in it without such an inquisition as would
have been altogether insupportable in a free country. If the tax had been
considerable, it would have oppressed the small, and forced almost the whole
retail trade into the hands of the great dealers. The competition of the former
being taken away, the latter would have enjoyed a monopoly of the trade, and
like all other monopolists would soon have combined to raise their profits much
beyond what was necessary for the payment of the tax. The final payment, instead
of falling upon the shopkeeper, would have fallen upon the consumer, with a
considerable overcharge to the profit of the shopkeeper. For these reasons the
project of a tax upon shops was laid aside, and in the room of it was
substituted the subsidy, 1759.

What in France is called the personal taille is, perhaps, the most
important tax upon the profits of stock employed in agriculture that is levied
in any part of Europe.

In the disorderly state of Europe during the prevalence of the feudal
government, the sovereign was obliged to content himself with taxing those who
were too weak to refuse to pay taxes. The great lords, though willing to assist
him upon particular emergencies, refused to subject themselves to any constant
tax, and he was not strong enough to force them. The occupiers of land all over
Europe were, the greater part of them, originally bondmen. Through the greater
part of Europe they were gradually emancipated. Some of them acquired the
property of landed estates which they held by some base or ignoble tenure,
sometimes under the king, and sometimes under some other great lord, like the
ancient copy-holders of England. Others without acquiring the property, obtained
leases for terms of years of the lands which they occupied under their lord, and
thus became less dependent upon him. The great lords seem to have beheld the
degree of prosperity and independency which this inferior order of men had thus
come to enjoy with a malignant and contemptuous indignation, and willingly
consented that the sovereign should tax them. In some countries this tax was
confined to the lands which were held in property by an ignoble tenure; and, in
this case, the taille was said to be real. The land-tax established by the late
King of Sardinia, and the taille in the provinces of Languedoc, Provence,
Dauphine, and Brittany, in the generality of Montauban, and in the elections of
Agen and Comdom, as well as in some other districts of France, are taxes upon
lands held in property by an ignoble tenure. In other countries the tax was laid
upon the supposed profits of all those who held in farm or lease lands belonging
to other people, whatever might be the tenure by which the proprietor held them;
and in this case the taille was said to be personal. In the greater part of
those provinces of France which are called the Countries of Elections the taille
is of this kind. The real taille, as it is imposed only upon a part of the lands
of the country, is necessarily an unequal, but it is not always an arbitrary
tax, though it is so upon some occasions. The personal taille, as it is intended
to be proportioned to the profits of a certain class of people which can only be
guessed at, is necessarily both arbitrary and unequal.

In France the personal taille at present (1775) annually imposed upon the
twenty generalities called the Countries of Elections amounts to 40,107,239
livres, 16 sous. The proportion in which this sum is assessed upon those
different provinces varies from year to year according to the reports which are
made to the king's council concerning the goodness or badness of the crops, as
well as other circumstances which may either increase or diminish their
respective abilities to pay. Each generality it divided into a certain number of
elections, and the proportion in which the sum imposed upon the whole generality
is divided among those different elections varies likewise from year to year
according to the reports made to the council concerning their respective
abilities. It seems impossible that the council, with the best intentions, can
ever proportion with tolerable exactness either of those two assessments to the
real abilities of the province or district upon which they are respectively
laid. Ignorance and misinformation must always, more or less, mislead the most
upright council. The proportion which each parish ought to support of what is
assessed upon the whole election, and that which each individual ought to
support of what is assessed upon his particular parish, are both in the same
manner varied, from year to year, according as circumstances are supposed to
require. These circumstances are judged of, in the one case, by the officers of
the election, in the other by those of the parish, and both the one and the
other are, more or less, under the direction and influence of the intendant. Not
only ignorance and misinformation, but friendship, party animosity, and private
resentment are said frequently to mislead such assessors. No man subject to such
a tax, it is evident, can ever be certain, before he is assessed, of what he is
to pay. He cannot even be certain after he is assessed. If any person has been
taxed who ought to have been exempted, or if any person has been taxed beyond
his proportion, though both must pay in the meantime, yet if they complain, and
make good their complaints, the whole parish is reimposed next year in order to
reimburse them. If any of the contributors become bankrupt or insolvent, the
collector is obliged to advance his tax, and the whole parish is reimposed next
year in order to reimburse the collector. If the collector himself should become
bankrupt, the parish which elects him must answer for his conduct to the
receiver general of the election. But, as it might be troublesome for the
receiver to prosecute the whole parish, he takes at his choice five or six of
the richest contributors and obliges them to make good what had been lost by the
insolvency of the collector. The parish is afterwards reimposed in order to
reimburse those five or six. Such reimpositions are always over and above the
taille of the particular year in which they are laid on.

When a tax is imposed upon the profits of stock in a particular branch of
trade, the traders are all careful to bring no more goods to market than what
they can sell at a price sufficient to reimburse them for advancing the tax.
Some of them withdraw a part of their stocks from the trade, and the market is
more sparingly supplied than before. The price of the goods rises, and the final
payment of the tax falls upon the consumer. But when a tax is imposed upon the
profits of stock employed in agriculture, it is not the interest of the farmers
to withdraw any part of their stock from that employment. Each farmer occupies a
certain quantity of land, for which hi pays rent. For the proper cultivation of
this land a certain quantity of stock is necessary, and by withdrawing any part
of this necessary quantity, the farmer is not likely to be more able to pay
either the rent or the tax. In order to pay the tax, it can never be his
interest to diminish the quantity of his produce, nor consequently to supply the
market more sparingly than before. The tax, therefore, will never enable him to
raise the price of his produce so as to reimburse himself by throwing the final
payment upon the consumer. The farmer, however, must have his reasonable profit
as well as every other dealer, otherwise he must give up the trade. After the
imposition of a tax of this kind, he can get this reasonable profit only by
paying less rent to the landlord. The more he is obliged to pay in the way of
tax the less he can afford to pay in the way of rent. A tax of this kind imposed
during the currency of a lease may, no doubt, distress or ruin the farmer. Upon
the renewal of the lease it must always fall upon the landlord.

In the countries where the personal taille takes place, the farmer is
commonly assessed in proportion to the stock which he appears to employ in
cultivation. He is, upon this account, frequently afraid to have a good team of
horses or oxen, but endeavours to cultivate with the meanest and most wretched
instruments of husbandry that he can. Such is his distrust in the justice of his
assessors that he counterfeits poverty, and wishes to appear scarce able to pay
anything for fear of being obliged to pay too much. By this miserable policy he
does not, perhaps, always consult his own interest in the most effectual manner,
and he probably loses more by the diminution of his produce than he saves by
that of his tax. Though, in consequence of this wretched cultivation, the market
is, no doubt, somewhat worse supplied, yet the small rise of price which may
occasion, as it is not likely even to indemnify the farmer for the diminution of
his produce, it is still less likely to enable him to pay more rent to the
landlord. The public, the farmer, the landlord, all suffer more or less by this
degraded cultivation. That the personal taille tends, in many different ways, to
discourage cultivation, and consequently to dry up the principal source of the
wealth of every great country, I have already had occasion to observe in the
third book of this Inquiry.

What are called poll-taxes in the southern provinces of North America,
and in the West Indian Islands annual taxes of so much a head upon every negro,
are properly taxes upon the profits of a certain species of stock employed in
agriculture. As the planters are, the greater part of them, both farmers and
landlords, the final payment of the tax falls upon them in their quality of
landlords without any retribution.

Taxes of so much a head upon the bondmen employed in cultivation seem
anciently to have been common all over Europe. There subsists at present a tax
of this kind in the empire of Russia. It is probably upon this account that
poll-taxes of all kinds have often been represented as badges of slavery. Every
tax, however, is to the person who pays it a badge, not of slavery, but of
liberty. It denotes that he is subject to government, indeed, but that, as he
has some property, he cannot himself be the property of a master. A poll-tax
upon slaves is altogether different from a poll-tax upon freemen. The latter is
paid by the persons upon whom it is imposed; the former by a different set of
persons. The latter is either altogether arbitrary or altogether unequal, and in
most cases is both the one and the other; the former, though in some respects
unequal, different slaves being of different values, is in no respect arbitrary.
Every master who knows the number of his own slaves knows exactly what he has to
pay. Those different taxes, however, being called by the same name, have been
considered as of the same nature.

The taxes which in Holland are imposed upon men- and maid-servants are
taxes, not upon stock, but upon expense, and so far resemble the taxes upon
consumable commodities. The tax of a guinea a head for every man-servant which
has lately been imposed in Great Britain is of the same kind. It falls heaviest
upon the middling rank. A man of two hundred a year may keep a single
manservant. A man of ten thousand a year will not keep fifty. It does not affect
the poor.

Taxes upon the profits of stock in particular employments can never
affect the interest of money. Nobody will lend his money for less interest to
those who exercise the taxed than to those who exercise the untaxed employments.
Taxes upon the revenue arising from stock in all employments where the
government attempts to levy them with any degree of exactness, will, in many
cases, fall upon the interest of money. The Vingtieme, or twentieth penny, in
France is a tax of the same kind with what is called the land-tax in England,
and is assessed, in the same manner, upon the revenue arising from land, houses,
and stock. So far as it affects stock it is assessed, though not with great
rigour, yet with much more exactness than that part of the land-tax of England
which is imposed upon the same fund. It, in many cases, falls altogether upon
the interest of money. Money is frequently sunk in France upon what are called
Contracts for the constitution of a rent; that is, perpetual annuities
redeemable at any time by the debtor upon repayment of the sum originally
advanced, but of which this redemption is not exigible by the creditor except in
particular cases. The Vingtieme, seems not to have raised the rate of those
annuities, though it is exactly levied upon them all.

Appendix to ARTICLES
I and II.

Taxes upon the Capital Value of Land, Houses, and Stock

While property remains in the possession of the same person, whatever
permanent taxes may have been imposed upon it, they have never been intended to
diminish or take away any part of its capital value, but only some part of the
revenue arising from it. But when property changes hands, when it is transmitted
either from the dead to the living, or from the living to the living, such taxes
have frequently been imposed upon it as necessarily take away some part of its
capital value.

The transference of all sorts of property from the dead to the living,
and that of immovable property, of lands and houses, from the living to the
living, are transactions which are in their nature either public and notorious,
or such as cannot be long concealed. Such transactions, therefore, may be taxed
directly. The transference of stock, or movable property, from the living to the
living, by the lending of money, is frequently a secret transaction, and may
always be made so. It cannot easily, therefore, be taxed directly. It has been
taxed indirectly in two different ways; first, by requiring that the deed
containing the obligation to repay should be written upon paper or parchment
which had paid a certain stamp-duty, otherwise not to be valid; secondly, by
requiring, under the like penalty of invalidity, that it should be recorded
either in a public or secret register, and by imposing certain duties upon such
registration. Stamp-duties and duties of registration have frequently been
imposed likewise upon the deeds transferring property of all kinds from the dead
to the living, and upon those transferring immovable property from the living to
the living, transactions which might easily have been taxed directly.

The Vicesima Hereditatum, the twentieth penny of inheritances imposed by
Augustus upon the ancient Romans, was a tax upon the transference of property
from the dead to the living. Dion Cassius, the author who writes concerning it
the least indistinctly, says that it was imposed upon all successions, legacies,
and donations in case of death, except upon those to the nearest relations and
to the poor.

Of the same kind is the Dutch tax upon successions. Collateral
successions are taxed, according to the degree of relation, from five to thirty
per cent upon the whole value of the succession. Testamentary donations, or
legacies to collaterals, are subject to the like duties. Those from husband to
wife, or from wife to husband, to the fiftieth penny. The Luctuosa Hereditas,
the mournful succession of ascendants to descendants, to the twentieth penny
only. Direct successions, or those of descendants to ascendants, pay no tax. The
death of a father, to such of his children as live in the same house with him,
is seldom attended with any increase, and frequently with a considerable
diminution of revenue, by the loss of his industry, of his office, or of some
life-rent estate of which he may have been in possession. That tax would be
cruel and oppressive which aggravated their loss by taking from them any part of
his succession. It may, however, sometimes be otherwise with those children who,
in the language of the Roman law, are said to be emancipated; in that of the
Scotch law, to be forisfamiliated; that is, who have received their portion,
have got families of their own, and are supported by funds separate and
independent of those of their father. Whatever part of his succession might come
to such children would be a real addition to their fortune, and might therefore,
perhaps, without more inconveniency than what attends all duties of this kind,
be liable to some tax.

The casualties of the feudal law were taxes upon the transference of
land, both from the dead to the living, and from the living to the living. In
ancient times they constituted in every part of Europe one of the principal
branches of the revenue of the crown.

The heir of every immediate vassal of the crown paid a certain duty,
generally a year's rent, upon receiving the investiture of the estate. If the
heir was a minor, the whole rents of the estate during the continuance of the
minority devolved to the superior without any other charge besides the
maintenance of the minor, and the payment of the widow's dower when there
happened to be a dowager upon the land. When the minor came to be of age,
another tax, called Relief, was still due to the superior, which generally
amounted likewise to a year's rent. A long minority, which in the present times
so frequently disburdens a great estate of all its incumbrances and restores the
family to their ancient splendour, could in those times have no such effect. The
waste, and not the disincumbrance of the estate, was the common effect of a long
minority.

By the feudal law the vassal could not alienate without the consent of
his superior, who generally extorted a fine or composition for granting it. This
fine, which was at first arbitrary, came in many countries to be regulated at a
certain portion of the price of the land. In some countries where the greater
part of the other feudal customs have gone into disuse, this tax upon the
alienation of land still continues to make a very considerable branch of the
revenue of the sovereign. In the canton of Berne it is so high as a sixth part
of the price of all noble fiefs, and a tenth part of that of all ignoble ones.
In the canton of Lucerne the tax upon the sale of lands is not universal, and
takes place only in certain districts. But if any person sells his land in order
to remove out of the territory, he pays ten per cent upon the whole price of the
sale. Taxes of the same kind upon the sale either of all lands, or of lands held
by certain tenures, take place in many other countries, and make a more or less
considerable branch of the revenue of the sovereign.

Such transactions may be taxed indirectly by means either of
stamp-duties, or of duties upon registration, and those duties either may or may
not be proportioned to the value of the subject which is transferred.

In Great Britain the stamp-duties are higher or lower, not so much
according to the value of the property transferred (an eighteenpenny or
half-crown stamp being sufficient upon a bond for the largest sum of money) as
according to the nature of the deed. The highest do not exceed six pounds upon
every sheet of paper or skin of parchment, and these high duties fall chiefly
upon grants from the crown, and upon certain law proceedings, without any regard
to the value of the subject. There are in Great Britain no duties on the
registration of deeds or writings, except the fees of the officers who keep the
register, and these are seldom more than a reasonable recompense for their
labour. The crown derives no revenue from them.

In Holland there are both stamp-duties and duties upon registration,
which in some cases are, and in some are not, proportioned to the value of the
property transferred. All testaments must be written upon stamped paper of which
the price is proportioned to the property disposed of, so that there are stamps
which cost from threepence, or three stivers a sheet, to three hundred florins,
equal to about twenty-seven pounds ten shillings of our money. If the stamp is
of an inferior price to what the testator ought to have made use of, his
succession is confiscated. This is over and above all their other taxes on
succession. Except bills of exchange, and some other mercantile bills, all other
deeds, bonds, and contracts are subject to a stamp-duty. This duty, however,
does not rise in proportion to the value of the subject. All sales of land and
of houses, and all mortgages upon either, must be registered, and, upon
registration, pay a duty to the state of two and a half per cent upon the amount
of the price or of the mortgage. This duty is extended to the sale of all ships
and vessels of more than two tons burden, whether decked or undecked. These, it
seems, are considered as a sort of houses upon the water. The sale of movables,
when it is ordered by a court of justice, is subject to the like duty of two and
a half per cent.

In France there are both stamp-duties and duties upon registration. The
former are considered as a branch of the aides or excise, and in the provinces
where those duties take place are levied by the excise officers. The latter are
considered as a branch of the domain of the crown, and are levied by a different
set of officers.

Those modes of taxation, by stamp-duties and by duties upon registration,
are of very modern invention. In the course of little more than a century,
however, stamp-duties have, in Europe, become almost universal, and duties upon
registration extremely common. There is no art which one government sooner
learns of another than that of draining money from the pockets of the people.

Taxes upon the transference of property from the dead to the living fall
finally as well as immediately upon the person to whom the property is
transferred. Taxes upon the sale of land fall altogether upon the seller. The
seller is almost always under the necessity of selling, and must, therefore,
take such a price as he can get. The buyer is scarce ever under the necessity of
buying, and will, therefore, only give such a price as he likes. He considers
what the land will cost him in tax and price together. The more he is obliged to
pay in the way of tax, the less he will be disposed to give in the way of price.
Such taxes, therefore, fall almost always upon a necessitous person, and must,
therefore, be frequently very cruel and oppressive. Taxes upon the sale of
new-built houses, where the building is sold without the ground, fall generally
upon the buyer, because the builder must generally have his profit, otherwise he
must give up the trade. If he advances the tax, therefore, the buyer must
generally repay it to him. Taxes upon the sale of old houses, for the same
reason as those upon the sale of land, fall generally upon the seller, whom in
most cases either conveniency or necessity obliges to sell. The number of
new-built houses that are annually brought to market is more or less regulated
by the demand. Unless the demand is such as to afford the builder his profit,
after paying all expenses, he will build no more houses. The number of old
houses which happen at any time to come to market is regulated by accidents of
which the greater part have no relation to the demand. Two or three great
bankruptcies in a mercantile town will bring many houses to sale which must be
sold for what can be got for them. Taxes upon the sale of ground-rents fall
altogether upon the seller, for the same reason as those upon the sale of land.
Stamp-duties, and duties upon the registration of bonds and contracts for
borrowed money, fall altogether upon the borrower, and, in fact, are always paid
by him. Duties of the same kind upon law proceedings fall upon the suitors. They
reduce to both the capital value of the subject in dispute. The more it costs to
acquire any property, the less must be the net value of it when acquired.

All taxes upon the transference of property of every kind, so far as they
diminish the capital value of that property, tend to diminish the funds destined
for the maintenance of productive labour. They are all more or less unthrifty
taxes that increase the revenue of the sovereign, which seldom maintains any but
unproductive labourers, at the expense of the capital of the people, which
maintains none but productive.

Such taxes, even when they are proportioned to the value of the property
transferred, are still unequal, the frequency of transference not being always
equal in property of equal value. When they are not proportioned to this value,
which is the case with the greater part of the stamp-duties and duties of
registration, they are still more so. They are in no respect arbitrary, but are
or may be in all cases perfectly clear and certain. Though they sometimes fall
upon the person who is not very able to pay, the time of payment is in most
cases sufficiently convenient for him. When the payment becomes due, he must in
most cases have the money to pay. They are levied at very little expense, and in
general subject the contributors to no other inconveniency besides always the
unavoidable one of paying the tax.

In France the stamp-duties are not much complained of. Those of
registration, which they call the Controle, are. They give occasion, it is
pretended, to much extortion in the officers of the farmers-general who collect
the tax, which is in a great measure arbitrary and uncertain. In the greater
part of the libels which have been written against the present system of
finances in France the abuses of the Controle make a principal article.
Uncertainty, however, does not seem to be necessarily inherent in the nature of
such taxes. If the popular complaints are well founded, the abuse must arise,
not so much from the nature of the tax as from the want of precision and
distinctness in the words of the edicts or laws which impose it.

The registration of mortgages, and in general of all rights upon
immovable property, as it gives great security both to creditors and purchasers,
is extremely advantageous to the public. That of the greater part of deeds of
other kinds is frequently inconvenient and even dangerous to individuals,
without any advantage to the public. All registers which, it is acknowledged,
ought to be kept secret, ought certainly never to exist. The credit of
individuals ought certainly never to depend upon so very slender a security as
the probity and religion of the inferior officers of revenue. But where the fees
of registration have been made a source of revenue to the sovereign, register
offices have commonly been multiplied without end, both for the deeds which
ought to be registered, and for those which ought not. In France there are
several different sorts of secret registers. This abuse, though not perhaps a
necessary, it must be acknowledged, is a very natural effect of such taxes.

Such stamp-duties as those in England upon cards and dice, upon
newspapers and periodical pamphlets, etc., are properly taxes upon consumption;
the final payment falls upon the persons who use or consume such commodities.
Such stamp-duties as those upon licences to retail ale, wine, and spirituous
liquors, though intended, perhaps, to fall upon the profits of the retailers,
are likewise finally paid by the consumers of those liquors. Such taxes, though
called by the same name, and levied by the same officers and in the same manner
with the stamp-duties above mentioned upon the transference of property, are,
however, of a quite different nature, and fall upon quite different funds.

ARTICLE III

Taxes upon the Wages of Labour

The wages of the inferior classes
of workmen, I have endeavoured to show in the first book, are everywhere
necessarily regulated by two different circumstances; the demand for labour, and
the ordinary or average price of provisions. The demand for labour, according as
it happens to be either increasing, stationary, or declining, or to require an
increasing, stationary, or declining population, regulates the subsistence of
the labourer, and determines in what degree it shall be, either liberal,
moderate, or scanty. The ordinary or average price of provisions determines the
quantity of money which must be paid to the workman in order to enable him, one
year with another, to purchase this liberal, moderate, or scanty subsistence.
While the demand for labour and the price of provisions, therefore, remain the
same, a direct tax upon the wages of labour can have no other effect than to
raise them somewhat higher than the tax. Let us suppose, for example, that in a
particular place the demand for labour and the price of provisions were such as
to render ten shillings a week the ordinary wages of labour, and that a tax of
one-fifth, or four shillings in the pound, was imposed upon wages. If the demand
for labour and the price of provisions remained the same, it would still be
necessary that the labourer should in that place earn such a subsistence as
could be bought only for ten shillings a week free wages. But in order to leave
him such free wages after paying such a tax, the price of labour must in that
place soon rise, not to twelve shillings a week only, but to twelve and
sixpence; that is, in order to enable him to pay a tax of one-fifth, his wages
must necessarily soon rise, not one-fifth part only, but one-fourth. Whatever
was the proportion of the tax, the wages of labour must in all cases rise, not
only in that proportion, but in a higher proportion. If the tax, for example,
was one-tenth, the wages of labour must necessarily soon rise, not one-tenth
part only, but one-eighth.

A direct tax upon the wages of labour, therefore, though the labourer
might perhaps pay it out of his hand, could not properly be said to be even
advanced by him; at least if tile demand for labour and the average price of
provisions remained the same after the tax as before it. In all such cases, not
only the tax but something more than the tax would in reality be advanced by the
person who immediately employed him. The final payment would in different cases
fall upon different persons. The rise which such a tax might occasion in the
wages of manufacturing labour would be advanced by the master manufacturer, who
would both be entitled and obliged to charge it, with a profit, upon the price
of his goods. The final payment of this rise of wages, therefore, together with
the additional profit of the master manufacturer, would fall upon the consumer.
The rise which such a tax might occasion in the wages of country labour would be
advanced by the farmer, who, in order to maintain the same number of labourers
as before, would be obliged to employ a greater capital. In order to get back
this greater capital, together with the ordinary profits of stock, it would be
necessary that he should retain a larger portion, or what comes to the same
thing, the price of a larger portion, of the produce of the land, and
consequently that he should pay less rent to the landlord. The final payment of
this rise of wages, therefore, would in this case fall upon the landlord,
together with the additional profit of the farmer who had advanced it. In all
cases a direct tax upon the wages of labour must, in the long-run, occasion both
a greater reduction in the rent of land, and a greater rise in the price of
manufactured goods, than would have followed from the proper assessment of a sum
equal to the produce of the tax partly upon the rent of land, and partly upon
consumable commodities.

If direct taxes upon the wages of labour have not always occasioned a
proportionable rise in those wages, it is because they have generally occasioned
a considerable fall in the demand for labour. The declension of industry, the
decrease of employment for the poor, the diminution of the annual produce of the
land and labour of the country, have generally been the effects of such taxes.
In consequence of them, however, the price of labour must always be higher than
it otherwise would have been in the actual state of the demand: and this
enhancement of price, together with the profit of those who advance it, must
always be finally paid by the landlords and consumers.

A tax upon the wages of country labour does not raise the price of the
rude produce of land in proportion to the tax, for the same reason that a tax
upon the farmer's profit does not raise that price in that proportion.

Absurd and destructive as such taxes are, however, they take place in
many countries. In France that part of the taille which is charged upon the
industry of workmen and day-labourers in country villages is properly a tax of
this kind. Their wages are computed according to the common rate of the district
in which they reside, and that they may be as little liable as possible to any
overcharge, their yearly gains are estimated at no more than two hundred working
days in the year. The tax of each individual is varied from year to year
according to different circumstances, of which the collector or the commissary
whom the intendant appoints to assist him are the judges. In Bohemia, in
consequence of the alteration in the system of finances which was begun in 1748,
a very heavy tax is imposed upon the industry of artificers. They are divided
into four classes. The highest class pay a hundred florins a year which, at
two-and-twenty pence halfpenny a florin, amounts to L9 7s. 6d. The second class
are taxed at seventy; the third at fifty; and the fourth, comprehending
artificers in villages, and the lowest class of those in towns, at twenty-five
florins.

The recompense of ingenious artists and of men of liberal professions, I
have endeavoured to show in the first book, necessarily keeps a certain
proportion to the emoluments of inferior trades. A tax upon this recompense,
therefore, could have no other effect than to raise it somewhat higher than in
proportion to the tax. If it did not rise in this manner, the ingenious arts and
the liberal professions, being no longer upon a level with other trades, would
be so much deserted that they would soon return to that level.

The emoluments of offices are not, like those of trades and professions,
regulated by the free competition of the market, and do not, therefore, always
bear a just proportion to what the nature of the employment requires. They are,
perhaps, in most countries, higher than it requires; the persons who have the
administration of government being generally disposed to reward both themselves
and their immediate dependants rather more than enough. The emoluments of
offices, therefore, can in most cases very well bear to be taxed. The persons,
besides, who enjoy public offices, especially the more lucrative, are in all
countries the objects of general envy, and a tax upon their emoluments, even
though it should be somewhat higher than upon any other sort of revenue, is
always a very popular tax. In England, for example, when by the land-tax every
other sort of revenue was supposed to be assessed at four shillings in the
pound, it was very popular to lay a real tax of five shillings and sixpence in
the pound upon the salaries of offices which exceeded a hundred pounds a year,
the pensions of the younger branches of the royal family, the pay of the
officers of the army and navy, and a few others less obnoxious to envy excepted.
There are in England no other direct taxes upon the wages of labour.

IN
that rude state of society which precedes the extension of
commerce and the improvement of manufactures, when those expensive
luxuries which commerce and manufactures can alone introduce are
altogether unknown, the person who possesses a large revenue, I have
endeavoured to show in the third book of this Inquiry, can spend or
enjoy that revenue in no other way than by maintaining nearly as
many people as it can maintain. A large revenue may at all times be
said to consist in the command of a large quantity of the
necessaries of life. In that rude state of things it is commonly
paid in a large quantity of those necessaries, in the materials of
plain food and coarse clothing, in corn and cattle, in wool and raw
hides. When neither commerce nor manufactures furnish anything for
which the owner can exchange the greater part of those materials which
are over and above his own consumption, he can do nothing with the
surplus but feed and clothe nearly as many people as it will feed
and clothe. A hospitality in which there is no luxury, and a
liberality in which there is no ostentation, occasion, in this
situation of things, the principal expenses of the rich and the great.
But these, I have likewise endeavoured to show in the same book, are
expenses by which people are not very apt to ruin themselves. There is
not, perhaps, any selfish pleasure so frivolous of which the pursuit
has not sometimes ruined even sensible men. A passion for
cock-fighting has ruined many. But the instances, I believe, are not
very numerous of people who have been ruined by a hospitality or
liberality of this kind, though the hospitality of luxury and the
liberality of ostentation have ruined many. Among our feudal
ancestors, the long time during which estates used to continue in
the same family sufficiently demonstrates the general disposition of
people to live within their income. Though the rustic hospitality
constantly exercised by the great land-holders may not, to us in the
present times, seem consistent with that order which we are apt to
consider as inseparably connected with good economy, yet we must
certainly allow them to have been at least so far frugal as not
commonly to have spent their whole income. A part of their wool and
raw hides they had generally an opportunity of selling for money. Some
part of this money, perhaps, they spent in purchasing the few
objects of vanity and luxury with which the circumstances of the times
could furnish them; but some part of it they seem commonly to have
hoarded. They could not well, indeed, do anything else but hoard
whatever money they saved. To trade was disgraceful to a gentleman,
and to lend money at interest, which at that time was considered as
usury and prohibited by law, would have been still more so. In those
times of violence and disorder, besides, it was convenient to have a
hoard of money at hand, that in case they should be driven from
their own home they might have something of known value to carry
with them to some place of safety. The same violence which made it
convenient to hoard made it equally convenient to conceal the hoard.
The frequency of treasure-trove, or of treasure found of which no
owner was known, sufficiently demonstrates the frequency in those
times both of hoarding and of concealing the board. Treasure-trove was
then considered as an important branch of the revenue of the
sovereign. All the treasure-trove of the kingdom would scarce
perhaps in the present times make an important branch of the revenue
of a private gentleman of a good estate.

The same disposition to save and to hoard prevailed in the
sovereign as well as in the subjects. Among nations to whom commerce
and manufactures are little known, the sovereign, it has already
been observed in the fourth book, is in a situation which naturally
disposes him to the parsimony requisite for accumulation. In that
situation the expense even of a sovereign cannot be directed by that
vanity which delights in the gaudy finery of a court. The ignorance of
the times affords but few of the trinkets in which that finery
consists. Standing armies are not then necessary, so that the
expense even of a sovereign, like that of any other great lord, can be
employed in scarce anything but bounty to his tenants and
hospitality to his retainers. But bounty and hospitality very seldom
lead to extravagance; though vanity almost always does. All the
ancient sovereigns of Europe accordingly, it has already been
observed, had treasures. Every Tartar chief in the present times is
said to have one.

In a commercial country abounding with every sort of expensive
luxury, the sovereign, in the same manner as almost all the great
proprietors in his dominions, naturally spends a great part of his
revenue in purchasing those luxuries. His own and the neighbouring
countries supply him abundantly with all the costly trinkets which
compose the splendid but insignificant pageantry of a court. For the
sake of an inferior pageantry of the same kind, his nobles dismiss
their retainers, make their tenants independent, and become
gradually themselves as insignificant as the greater part of the
wealthy burghers in his dominions. The same frivolous passions which
influence their conduct influence his. How can it be supposed that
he should be the only rich man in his dominions who is insensible to
pleasures of this kind? If he does not, what he is very likely to
do, spend upon those pleasures so great a part of his revenue as to
debilitate very much the defensive power of the state, it cannot
well be expected that he should not spend upon them all that part of
it which is over and above what is necessary for supporting that
defensive power. His ordinary expense becomes equal to his ordinary
revenue, and it is well if it does not frequently exceed it. The
amassing of treasure can no longer be expected, and when extraordinary
exigencies require extraordinary expenses, he must necessarily call
upon his subjects for an extraordinary aid. The present and the late
king of Prussia are the only great princes of Europe who, since the
death of Henry IV of France in 1610, are supposed to have amassed
any considerable treasure. The parsimony which leads to accumulation
has become almost as rare in republican as in monarchical governments.
The Italian republics, the United Provinces of the Netherlands, are
all in debt. The canton of Berne is the single republic in Europe
which has amassed any considerable treasure. The other Swiss republics
have not. The taste for some sort of pageantry, for splendid
buildings, at least, and other public ornaments, frequently prevails
as much in the apparently sober senate-house of a little republic as
in the dissipated court of the greatest king.

The want of parsimony in time of peace imposes the necessity of
contracting debt in time of war. When war comes, there is no money
in the treasury but what is necessary for carrying on the ordinary
expense of the peace establishment. In war an establishment of three
of four times that expense becomes necessary for the defence of the
state, and consequently a revenue three or four times greater than the
peace revenue. Supposing that the sovereign should have, what he
scarce ever has, the immediate means of augmenting his revenue in
proportion to the augmentation of his expense, yet still the produce
of the taxes, from which this increase of revenue must be drawn,
will not begin to come into the treasury till perhaps ten or twelve
months after they are imposed. But the moment in which war begins,
or rather the moment in which it appears likely to begin, the army
must be augmented, the fleet must be fitted out, the garrisoned
towns must be put into a posture of defence; that army, that fleet,
those garrisoned towns must be furnished with arms, ammunition, and
provisions. An immediate and great expense must be incurred in that
moment of immediate danger, which will not wait for the gradual and
slow returns of the new taxes. In this exigency government can have no
other resource but in borrowing.

The same commercial state of society which, by the operation of
moral causes, brings government in this manner into the necessity of
borrowing, produces in the subjects both an ability and an inclination
to lend. If it commonly brings along with it the necessity of
borrowing, it likewise brings along with it the facility of doing so.

A country abounding with merchants and manufacturers necessarily
abounds with a set of people through whose hands not only their own
capitals, but the capitals of all those who either lend them money, or
trust them with goods, pass as frequently, or more frequently, than
the revenue of a private man, who, without trade or business, lives
upon his income, passes through his hands. The revenue of such a man
can regularly pass through his hands only once in a year. But the
whole amount of the capital and credit of a merchant, who deals in a
trade of which the returns are very quick, may sometimes pass
through his hands two, three, or four times a year. A country
abounding with merchants and manufacturers, therefore, necessarily
abounds with a set of people who have it at all times in their power
to advance, if they choose to do so, a very large sum of money to
government. Hence the ability in the subjects of a commercial state to
lend.

Commerce and manufactures can seldom flourish long in any state
which does not enjoy a regular administration of justice, in which the
people do not feel themselves secure in the possession of their
property, in which the faith of contracts is not supported by law, and
in which the authority of the state is not supposed to be regularly
employed in enforcing the payment of debts from all those who are able
to pay. Commerce and manufactures, in short, can seldom flourish in
any state in which there is not a certain degree of confidence in
the justice of government. The same confidence which disposes great
merchants and manufacturers, upon ordinary occasions, to trust their
property to the protection of a particular government, disposes
them, upon extraordinary occasions, to trust that government with
the use of their property. By lending money to government, they do not
even for a moment diminish their ability to carry on their trade and
manufactures. On the contrary, they commonly augment it. The
necessities of the state render government upon most occasions willing
to borrow upon terms extremely advantageous to the lender. The
security which it grants to the original creditor is made transferable
to any other creditor, and, from the universal confidence in the
justice of the state, generally sells in the market for more than
was originally paid for it. The merchant or monied man makes money
by lending money to government, and instead of diminishing,
increases his trading capital. He generally considers it as a
favour, therefore, when the administration admits him to a share in
the first subscription for a new loan. Hence the inclination or
willingness in the subjects of a commercial state to lend.

The government of such a state is very apt to repose itself upon
this ability and willingness of its subjects to lend it their money on
extraordinary occasions. It foresees the facility of borrowing, and
therefore dispenses itself from the duty of saving.

In a rude state of society there are no great mercantile or
manufacturing capitals. The individuals who hoard whatever money
they can save, and who conceal their hoard, do so from a distrust of
the justice of government, from a fear that if it was known that
they had a hoard, and where that hoard was to be found, they would
quickly be plundered. In such a state of things few people would be
able, and nobody would be willing, to lend their money to government
on extraordinary exigencies. The sovereign feels that he must
provide for such exigencies by saving because he foresees the absolute
impossibility of borrowing. This foresight increases still further his
natural disposition to save.

The progress of the enormous debts which at present oppress, and
will in the long-run probably ruin, all the great nations of Europe
has been pretty uniform. Nations, like private men, have generally
begun to borrow upon what may be called personal credit, without
assigning or mortgaging any particular fund for the payment of the
debt; and when this resource has failed them, they have gone on to
borrow upon assignments or mortgages of particular funds.

What is called the unfunded debt of Great Britain is contracted in
the former of those two ways. It consists partly in a debt which
bears, or is supposed to bear, no interest, and which resembles the
debts that a private man contracts upon account, and partly in a
debt which bears interest, and which resembles what a private man
contracts upon his bill or promissory note. The debts which are due
either for extraordinary services, or for services either not provided
for, or not paid at the time when they are performed, part of the
extrordinaries of the army, navy, and ordnance, the arrears of
subsidies to foreign princes, those of seamen's wages, etc., usually
constitute a debt of the first kind, sometimes in payment of a part of
such Navy and exchequer bills, which are issued sometimes in payment
of a part of such debts and sometimes for other purposes, constitute a
debt of the second kind- exchequer bills bearing interest from the day
on which they are issued, and navy bills six months after they are
issued. The Bank of England, either by voluntarily discounting those
bills at their current value, or by agreeing with government for
certain considerations to circulate exchequer bills, that is, to
receive them at par, paying the interest which happens to be due
upon them, keeps up their value and facilitates their circulation, and
thereby frequently enables government to contract a very large debt of
this kind. In France, where there is no bank, the state bills (billets
d'etat) have sometimes sold at sixty and seventy per cent discount.
During the great recoinage in King William's time, when the Bank of
England thought proper to put a stop to its usual transactions,
exchequer bills and tallies are said to have sold from twenty-five
to sixty per cent discount; owing partly, no doubt, to the supposed
instability of the new government established by the Revolution, but
partly, too, to the want of the support of the Bank of England.

When this resource is exhausted, and it becomes necessary, in
order to raise money, to assign or mortgage some particular branch
of the public revenue for the payment of the debt, government has upon
different occasions done this in two different ways. Sometimes it
has made this assignment or mortgage for a short period of time
only, a year, or a few years, for example; and sometimes for
perpetuity. In the one case the fund was supposed sufficient to pay,
within the limited time, both principal and interest of the money
borrowed. In the other it was supposed sufficient to pay the
interest only, or a perpetual annuity equivalent to the interest,
government being at liberty to redeem at any time this annuity upon
paying back the principal sum borrowed. When money was raised in the
one way, it was said to be raised by anticipation; when in the
other, by perpetual funding, or, more shortly, by funding.

In Great Britain the land and malt taxes are regularly anticipated
every year, by virtue of a borrowing clause constantly inserted into
the acts which impose them. The Bank of England generally advances
at an interest, which since the Revolution has varied from eight to
three per cent, the sums for which those taxes are granted, and
receives payment as their produce gradually comes in. If there is a
deficiency, which there always is, it is provided for in the
supplies of the ensuing year. The only considerable branch of the
public revenue which yet remains unmortgaged is thus regularly spent
before it comes in. Like an improvident spendthrift, whose pressing
occasions will not allow him to wait for the regular payment of his
revenue, the state is in the constant practice of borrowing of its own
factors and agents, and of paying interest for the use of its own
money.

In the reign of King William, and during a great part of that of
Queen Anne, before we had become so familiar as we are now with the
practice of perpetual funding, the greater part of the new taxes
were imposed but for a short period of time (for four, five, six, or
seven years only), and a great part of the grants of every year
consisted in loans upon anticipations of the produce of those taxes.
The produce being frequently insufficient for paying within the
limited term the principal and interest of the money borrowed,
deficiencies arose, to make good which it became necessary to
prolong the term.

In 1697, by the 8th of William III, c. 20, the deficiencies of
several taxes were charged upon what was then called the first general
mortgage or fund, consisting of a prolongation to the first of
August 1706 of several different taxes which would have expired within
a shorter term, and of which the produce was accumulated into one
general fund. The deficiencies charged upon this prolonged term
amounted to L5,160,459 14s. 9 1/4d.

In 1701, those duties, with some others, were still further
prolonged for the like purposes till the first of August 1710, and
were called the second general mortgage or fund. The deficiencies
charged upon it amounted to L2,055,999 7s. 11 1/2d.

In 1707, those duties were still further prolonged, as a fund
for new loans, to the first of August 1712, and were called the
third general mortgage or fund. The sum borrowed upon it was
L983,254 11s. 9 1/4d.

In 1708, those duties were all (except the Old Subsidy of
Tonnage and Poundage, of which one moiety only was made a part of this
fund, and a duty upon the importation of Scotch linen, which had
been taken off by the Articles of Union) still further continued, as a
fund for new loans, to the first of August 1714, and were called the
fourth general mortgage or fund. The sum borrowed upon it was L925,176
9s. 2 1/4d.

In 1709, those cities were all (except the Old Subsidy of
Tonnage and Poundage, which was now left out of this fund
altogether) still further continued for the same purpose to the
first of August 1716, and were called the fifth general mortgage or
fund. The sum borrowed upon it was L922,029 6s.

In 1710, those duties were again prolonged to the first of
August 1720, and were called the sixth general mortgage or fund. The
sum borrowed upon it was L1,296,552 9s. 11 3/4d.

In 1711, the same duties (which at this time were thus subject
to four different anticipations) together with several others were
continued for ever, and made a fund for paying the interest of the
capital of the South Sea Company, which had that year advanced to
government, for paying debts and making good deficiencies, the sum
of L9,177,967 15s. 4d.; the greatest loan which at that time had
ever been made.

Before this period, the principal, so far as I have been able to
observe, the only taxes which in order to pay the interest of a debt
had been imposed for perpetuity, were those for paying the interest of
the money which had been advanced to government by the Bank and the
East India Company, and of what it was expected would be advanced, but
which was never advanced, by a projected land bank. The bank fund at
this time amounted to L3,375,027 17s. 10 1/2d., for which was paid
an annuity or interest of L206,501 13s. 5d. The East India fund
amounted to L3,200,000, for which was paid an annuity or interest of
L160,000- the bank fund being at six per cent, the East India fund
at five per cent interest.

In 1715, by the 1st of George I, c. 12, the different taxes
which had been mortgaged for paying the bank annuity, together with
several others which by this act were likewise rendered perpetual,
were accumulated into one common fund called The Aggregate Fund, which
was charged not only with the payments of the bank annuity, but with
several other annuities and burdens of different kinds. This fund
was afterwards augmented by the 3rd of George I, c. 8, and by the
5th of George I, c. 3, and the different duties which were then
added to it were likewise rendered perpetual.

In 1717, by the 3rd of George I, c. 7, several other taxes were
rendered perpetual, and accumulated into another common fund, called
The General Fund, for the payment of certain annuities, amounting in
the whole to L724,849 6s. 10 1/2d.

In consequence of those different acts, the greater part of the
taxes which before had been anticipated only for a short term of years
were rendered perpetual as a fund for paying, not the capital, but the
interest only, of the money which had been borrowed upon them by
different successive anticipations.

Had money never been raised but by anticipation, the course of a
few years would have liberated the public revenue without any other
attention of government besides that of not overloading the fund by
charging it with more debt than it could pay within the limited
term, and of not anticipating a second time before the expiration of
the first anticipation. But the greater part of European governments
have been incapable of those attentions. They have frequently
overloaded the fund even upon the first anticipation, and when this
happened not to be the case, they have generally taken care to
overload it by anticipating a second and a third time before the
expiration of the first anticipation. The fund becoming in this manner
altogether insufficient for paying both principal and interest of
the money borrowed upon it, it became necessary to charge it with
the interest only, or a perpetual annuity equal to the interest, and
such unprovident anticipations necessarily gave birth to the more
ruinous practice of perpetual funding. But though this practice
necessarily puts off the liberation of the public revenue from a fixed
period to one so indefinite that it is not very likely ever to arrive,
yet as a greater sum can in all cases be raised by this new practice
than by the old one of anticipations, the former, when men have once
become familiar with it, has in the great exigencies of the state been
universally preferred to the latter. To relieve the present exigency
is always the object which principally interests those immediately
concerned in the administration of public affairs. The future
liberation of the public revenue they leave to the care of posterity.

During the reign of Queen Anne, the market rate of interest had
fallen from six to five per cent, and in the twelfth year of her reign
five per cent was declared to be the highest rate which could lawfully
be taken for money borrowed upon private security. Soon after the
greater part of the temporary taxes of Great Britain had been rendered
perpetual, and distributed into the Aggregate, South Sea, and
General Funds, the creditors of the public, like those of private
persons, were induced to accept of five per cent for the interest of
their money, which occasioned a saving of one per cent upon the
capital of the greater part of the debts which had been thus funded
for perpetuity, or of one-sixth of the greater part of the annuities
which were paid out of the three great funds above mentioned. This
saving left a considerable surplus in the produce of the different
taxes which had been accumulated into those funds over and above
what was necessary for paying the annuities which were now charged
upon them, and laid the foundation of what has since been called the
Sinking Fund. In 1717, it amounted to L323,434 7s. 7 1/2d. In 1727,
the interest of the greater part of the public debts was still further
reduced to four per cent; and in 1753 and 1757, to three and a half
and three per cent; which reductions still further augmented the
sinking fund.

A sinking fund, though instituted for the payment of old,
facilitates very much the contracting of new debts. It is a subsidiary
fund always at hand to be mortgaged in aid of any other doubtful
fund upon which money is proposed to be raised in an exigency of the
state. Whether the sinking fund of Great Britain has been more
frequently applied to the one or to the other of those two purposes
will sufficiently appear by and by.

Besides those two methods of borrowing, by anticipations and by
perpetual funding, there are two other methods which hold a sort of
middle place between them. These are, that of borrowing upon annuities
for terms of years, and that of borrowing upon annuities for lives.

During the reigns of King William and Queen Anne, large sums
were frequently borrowed upon annuities for terms of years, which were
sometimes longer and sometimes shorter. In 1693, an act was passed for
borrowing one million upon an annuity of fourteen per cent, or of
L140,000 a year for sixteen years. In 1691, an act was passed for
borrowing a million upon annuities for lives, upon terms which in
the present times would appear very advantageous. But the subscription
was not filled up. In the following year the deficiency was made
good by borrowing upon annuities for lives at fourteen per cent, or at
little more than seven years' purchase. In 1695, the persons who had
purchased those annuities were allowed to exchange them for others
of ninety-six years upon paying into the Exchequer sixty-three
pounds in the hundred; that is, the difference between fourteen per
cent for life, and fourteen per cent for ninety-six years, was sold
for sixty-three pounds, or for four and a half years' purchase. Such
was the supposed instability of government that even these terms
procured few purchasers. In the reign of Queen Anne money was upon
different occasions borrowed both upon annuities for lives, and upon
annuities for terms of thirty-two, of eighty-nine, of ninety-eight,
and of ninety-nine years. In 1719, the proprietors of the annuities
for thirty-two years were induced to accept in lieu of them South
Sea stock to the amount of eleven and a half years' purchase of the
annuities, together with an additional quantity of stock equal to
the arrears which happened then to be due upon them. In 1720, the
greater part of the other annuities for terms of years both long and
short were subscribed into the same fund. The long annuities at that
time amounted to L666,821 8s. 3 1/2d. a year. On the 5th of January
1775, the remainder of them, or what was not subscribed at that
time, amounted only to L136,453 12s. 8d.

During the two wars which began in 1739 and in 1755, little
money was borrowed either upon annuities for terms of years, or upon
those for lives. An annuity for ninety-eight or ninety-nine years,
however, is worth nearly as much money as a perpetuity, and should,
therefore, one might think, be a fund for borrowing nearly as much.
But those who, in order to make family settlements, and to provide for
remote futurity, buy into the public stocks, would not care to
purchase into one of which the value was continually diminishing;
and such people make a very considerable proportion both of the
proprietors and purchasers of stock. An annuity for a long term of
years, therefore, though its intrinsic value may be very nearly the
same with that of a perpetual annuity, will not find nearly the same
number of purchasers. The subscribers to a new loan, who mean
generally to sell their subscriptions as soon as possible, prefer
greatly a perpetual annuity redeemable by Parliament to an
irredeemable annuity for a long term of years of only equal amount.
The value of the former may be supposed always the same, or very
nearly the same, and it makes, therefore, a more convenient
transferable stock than the latter.

During the two last-mentioned wars, annuities, either for terms of
years or for lives, were seldom granted but as premiums to the
subscribers to a new loan over and above the redeemable annuity or
interest upon the credit of which the loan was supposed to be made.
They were granted, not as the proper fund upon which the money was
borrowed, but as an additional encouragement to the lender.

Annuities for lives have occasionally been granted in two
different ways; either upon separate lives, or upon lots of lives,
which in French are called Tontines, from the name of their
inventor. When annuities are granted upon separate lives, the death of
every individual annuitant disburthens the public revenue so far as it
was affected by his annuity. When annuities are granted upon tontines,
the liberation of the public revenue does not commence till the
death of all annuitants comprehended in one lot, which may sometimes
consist of twenty or thirty persons, of whom the survivors succeed
to the annuities of all those who die before them, the last survivor
succeeding to the annuities of the whole lot. Upon the same revenue
more money can always be raised by tontines than by annuities for
separate lives. An annuity, with a right of survivorship, is really
worth more than an equal annuity for a separate life, and from the
confidence which every man naturally has in his own good fortune,
the principle upon which is founded the success of all lotteries, such
an annuity generally sells for something more than it is worth. In
countries where it is usual for government to raise money by
granting annuities, tontines are upon this account generally preferred
to annuities for separate lives. The expedient which will raise most
money is almost always preferred to that which is likely to bring
about in the speediest manner the liberation of the public revenue.

In France a much greater proportion of the public debts consists
in annuities for lives than in England. According to a memoir
presented by the Parliament of Bordeaux to the king in 1764, the whole
public debt of France is estimated at twenty-four hundred millions
of livres, of which the capital for which annuities for lives had been
granted is supposed to amount to three hundred millions, the eighth
part of the whole public debt. The annuities themselves are computed
to amount to thirty millions a year, the fourth part of one hundred
and twenty millions, the supposed interest of that whole debt. These
estimations, I know very well, are not exact, but having been
presented by so very respectable a body as approximations to the
truth, they may, I apprehend, be considered as such. It is not the
different degrees of anxiety in the two governments of France and
England for the liberation of the public revenue which occasions
this difference in their respective modes of borrowing. It arises
altogether from the different views and interests of the lenders.

In England, the seat of government being in the greatest
mercantile city in the world, the merchants are generally the people
who advance money to government. By advancing it they do not mean to
diminish, but, on the contrary, to increase their mercantile capitals,
and unless they expected to sell with some profit their share in the
subscription for a new loan, they never would subscribe. But if by
advancing their money they were to purchase, instead of perpetual
annuities, annuities for lives only, whether their own or those of
other people, they would not always be so likely to sell them with a
profit. Annuities upon their own lives they would always sell with
loss, because no man will give for an annuity upon the life of
another, whose age and state of health are nearly the same with his
own, the same price which he would give for one upon his own. An
annuity upon the life of a third person, indeed, is, no doubt, of
equal value to the buyer and the seller; but its real value begins
to diminish from the moment it is granted, and continues to do so more
and more as long as it subsists. It can never, therefore, make so
convenient a transferable stock as a perpetual annuity, of which the
real value may be supposed always the same, or very nearly the same.

In France, the seat of government not being in a great
mercantile city, merchants do not make so great a proportion of the
people who advance money to government. The people concerned in the
finances, the farmers general, the receivers of the taxes which are
not in farm, the court bankers, etc., make the greater part of those
who advance their money in all public exigencies. Such people are
commonly men of mean birth, but of great wealth, and frequently of
great pride. They are too proud to marry their equals, and women of
quality disdain to marry them. They frequently resolve, therefore,
to live bachelors, and having neither any families of their own, nor
much regard for those of their relations, whom they are not always
very fond of acknowledging, they desire only to live in splendour
during their own time, and are not unwilling that their fortune should
end with themselves. The number of rich people, besides, who are
either averse to marry, or whose condition of life renders it either
improper or inconvenient for them to do so, is much greater in
France than in England. To such people, who have little or no care for
posterity, nothing can be more convenient than to exchange their
capital for a revenue which is to last just as long, and no longer,
than they wish it to do.

The ordinary expense of the greater part of modern governments
in time of peace being equal or nearly equal to their ordinary
revenue, when war comes they are both unwilling and unable to increase
their revenue in proportion to the increase of their expense. They are
unwilling for fear of offending the people, who, by so great and so
sudden an increase of taxes, would soon be disgusted with the war; and
they are unable from not well knowing what taxes would be sufficient
to produce the revenue wanted. The facility of borrowing delivers them
from the embarrassment which this fear and inability would otherwise
occasion. By means of borrowing they are enabled, with a very moderate
increase of taxes, to raise, from year to year, money sufficient for
carrying on the war, and by the practice of perpetually funding they
are enabled, with the smallest possible increase of taxes, to raise
annually the largest possible sum of money. In great empires the
people who live in the capital, and in the provinces remote from the
scene of action, feel, many of them, scarce any inconveniency from the
war; but enjoy, at their ease, the amusement of reading in the
newspapers the exploits of their own fleets and armies. To them this
amusement compensates the small difference between the taxes which
they pay on account of the war, and those which they had been
accustomed to pay in time of peace. They are commonly dissatisfied
with the return of peace, which puts an end to their amusement, and to
a thousand visionary hopes of conquest and national glory from a
longer continuance of the war.

The return of peace, indeed, seldom relieves them from the greater
part of the taxes imposed during the war. These are mortgaged for
the interest of the debt contracted in order to carry it on. If,
over and above paying the interest of this debt, and defraying the
ordinary expense of government, the old revenue, together with the new
taxes, produce some surplus revenue, it may perhaps be converted
into a sinking fund for paying off the debt. But, in the first
place, this sinking fund, even supposing it should be applied to no
other purpose, is generally altogether inadequate for paying, in the
course of any period during which it can reasonably be expected that
peace should continue, the whole debt contracted during the war;
and, in the second place, this fund is almost always applied to
other purposes.

The new taxes were imposed for the sole purpose of paying the
interest of the money borrowed upon them. If they produce more, it
is generally something which was neither intended nor expected, and is
therefore seldom very considerable. Sinking funds have generally
arisen not so much from any surplus of the taxes which was over and
above what was necessary for paying the interest or annuity originally
charged upon them, as from a subsequent reduction of that interest.
That of Holland in 1655, and that of the ecclesiastical state in 1685,
were both formed in this manner. Hence the usual insufficiency of such
funds.

During the most profound peace various events occur which
require an extraordinary expense, and government finds it always
more convenient to defray this expense by misapplying the sinking fund
than by imposing a new tax. Every new tax is immediately felt more
or less by the people. It occasions always some murmur, and meets with
some opposition. The more taxes may have been multiplied, the higher
they may have been raised upon every different subject of taxation;
the more loudly the people complain of every new tax, the more
difficult it becomes, too, either to find out new subjects of
taxation, or to raise much higher the taxes already imposed upon the
old. A momentary suspension of the payment of debt is not
immediately felt by the people, and occasions neither murmur nor
complaint. To borrow of the sinking fund is always an obvious and easy
expedient for getting out of the present difficulty. The more the
public debts may have been accumulated, the more necessary it may have
become to study to reduce them, the more dangerous, the more ruinous
it may be to misapply any part of the sinking fund; the less likely is
the public debt to be reduced to any considerable degree, the more
likely, the more certainly is the sinking fund to be misapplied
towards defraying all the extraordinary expenses which occur in time
of peace. When a nation is already overburdened with taxes, nothing
but the necessities of a new war, nothing but either the animosity
of national vengeance, or the anxiety for national security, can
induce the people to submit, with tolerable patience, to a new tax.
Hence the usual misapplication of the sinking fund.

In Great Britain, from the time that we had first recourse to
the ruinous expedient of perpetual funding, the reduction of the
public debt in time of peace has never borne any proportion to its
accumulation in time of war. It was in the war which began in 1688,
and was concluded by the Treaty of Ryswick in 1697, that the
foundation of the present enormous debt of Great Britain was first
laid.

On the 31st of December 1697, the public debts of Great Britain,
funded and unfunded, amounted to L21,515,742 13s. 8 1/2d. A great part
of those debts had been contracted upon short anticipations, and
some part upon annuities for lives, so that before the 31st of
December 1701, in less than four years, there had partly been paid
off, and partly reverted to the public, the sum of L5,121,041 12s. 0
3/4d.; a greater reduction of the public debt than has ever since been
brought about in so short a period of time. The remaining debt,
therefore, amounted only to L16,394,701 1s. 7 1/4d.

In the war which began in 1709., and which was concluded by the
Treaty of Utrecht, the public debts were still more accumulated. On
the 31st of December 1714, they amounted to L53,681,076 5s. 6 1/2d.
The subscription into the South Sea fund of the short and long
annuities increased the capital of the public debts, so that on the
31st of December 1722 it amounted to L55,282,978 1s. 3 5/6d. The
reduction of the debt began in 1723, and went on so slowly that, on
the 31st of December 1739, during seventeen years of profound peace,
the whole sum paid off was no more than L8,328,354 17s. 11 3/12d., the
capital of the public debt at that time amounting to L46,954,623 3s. 4
7/12d.

The Spanish war, which began in 1739, and the French war which
soon followed it occasioned further increase of the debt, which, on
the 31st of December 1748, after the war had been concluded by the
Treaty of Aix-la-Chapelle, amounted to L78,293,313 1s. 10 3/4d. The
most profound peace of seventeen years continuance had taken no more
than L8,328,354 17s. 11 3/12d. from it. A war of less than nine years'
continuance added L31,338,689 18s. 6 1/6d. to it.

During the administration of Mr. Pelham, the interest of the
public debt was reduced, or at least measures were taken for
reducing it, from four to three per cent; the sinking fund was
increased, and some part of the public debt was paid off. In 1755,
before the breaking out of the late war, the funded debt of Great
Britain amounted to L72,289,673. On the 5th of January 1763, at the
conclusion of the peace, the funded debt amounted to L122,603,336
8s. 2 1/4d. The unfunded debt has been stated at L13,927,589 2s. 2d.
But the expense occasioned by the war did not end with the
conclusion of the peace, so that though, on the 5th of January 1764,
the funded debt was increased (partly by a new loan, and partly by
funding a part of the unfunded debt) to L129,586,789 10s. 1 3/4d.,
there still remained (according to the very well informed author of
the Considerations on the Trade and Finances of Great Britain) an
unfunded debt which was brought to account in that and the following
year of L9,975,017 12s. 2 15/44d. In 1764, therefore, the public
debt of Great Britain, funded and unfunded together, amounted,
according to this author, to L139,516,807 2s. 4d. The annuities for
lives, too, which had been granted as premiums to the subscribers to
the new loans in 1757, estimated at fourteen years' purchase, were
valued at L472,500; and the annuities for long terms of years, granted
as premiums likewise in 1761 and 1762, estimated at twenty-seven and a
half years' purchase, were valued at L6,826,875. During a peace of
about seven years' continuance, the prudent and truly patriot
administration of Mr. Pelham was not able to pay off an old debt of
six millions. During a war of nearly the same continuance, a new
debt of more than seventy-five millions was contracted.

On the 5th of January 1775, the funded debt of Great Britain
amounted to L124,996,086 1s. 6 1/4d. The unfunded, exclusive of a
large civil list debt, to L4,150,263 3s. 11 7/8d. Both together, to
L129,146,322 5s. 6d. According to this account the whole debt paid off
during eleven years' profound peace amounted only to L10,415,474
16s. 9 7/8d. Even this small reduction of debt, however, has not
been all made from the savings out of the ordinary revenue of the
state. Several extraneous sums, altogether independent of that
ordinary revenue, have contributed towards it. Amongst these we may
reckon an additional shilling in the pound land-tax for three years;
the two millions received from the East India Company as
indemnification for their territorial acquisitions; and the one
hundred and ten thousand pounds received from the bank for the renewal
of their charter. To these must be added several other sums which,
as they arose out of the late war, ought perhaps to be considered as
deductions from the expenses of it. The principal are,

L

s.

d.

The produce of French prizes

690,449

18

9

Composition for French prisoners

670,000

0

0

What has been received from the sale

of the ceded islands

95,500

0

0

If we add to this sum the balance of the Earl of Chatham's and Mr.
Calcraft's accounts, and other army savings of the same kind, together
with what has been received from the bank, the East India Company, and
the additional shilling in the pound land-tax, the whole must be a
good deal more than five millions. The debt, therefore, which since
the peace has been paid out of the savings the ordinary revenue of the
state, has not, one year with another, amounted to half a million a
year. The sinking fund has, no doubt, been considerably augmented
since the peace, by the debt which has been paid off, by the reduction
of the redeemable four per cents to three per cents, and by the
annuities for lives which have fallen in, and, if peace were to
continue, a million, perhaps, might now be annually spared out of it
towards the discharge of the debt. Another million, accordingly, was
paid in the course of last year; but, at the same time, a new civil
list debt was left unpaid, and we are now involved in a new war which,
in its progress, may prove as expensive as any of our former wars.*
The new debt which will probably be contracted before the end of the
next campaign may perhaps be nearly equal to all the old debt which
has been paid off from the savings out of the ordinary revenue of
the state. It would be altogether chimerical, therefore, to expect
that the public debt should ever be completely discharged by any
savings which are likely to be made from that ordinary revenue as it
stands at present.

* It has proved more expensive than all of our former wars; and
has involved us in an additional debt of more than one hundred
millions. During a profound peace of eleven years, little more than
ten millions of debt was paid; during a war of seven years, more
than one hundred millions was contracted.

The public funds of the different indebted nations of Europe,
particularly those of England, have by one author been represented
as the accumulation of a great capital superadded to the other capital
of the country, by means of which its trade is extended, its
manufactures multiplied, and its lands cultivated and improved much
beyond what they could have been by means of that other capital
only. He does not consider that the capital which the first
creditors of the public advanced to government was, from the moment in
which they advanced it, a certain portion of the annual produce turned
away from serving in the function of a capital to serve in that of a
revenue; from maintaining productive labourers to maintain
unproductive ones, and to be spent and wasted, generally in the course
of the year, without even the hope of any future reproduction. In
return for the capital which they advanced they obtained, indeed, an
annuity in the public funds in most cases of more than equal value.
This annuity, no doubt, replaced to them their capital, and enabled
them to carry on their trade and business to the same or perhaps to
a greater extent than before; that is, they were enabled either to
borrow of other people a new capital upon the credit of this
annuity, or by selling it to get from other people a new capital of
their own equal or superior to that which they had advanced to
government. This new capital, however, which they in this manner
either bought or borrowed of other people, must have existed in the
country before, and must have been employed, as all capitals are, in
maintaining productive labour. When it came into the hands of those
who had advanced their money to government, though it was in some
respects a new capital to them, it was not so to the country, but
was only a capital withdrawn from certain employments in or to be
turned towards others. Though it replaced to them what they had
advanced to government, it did not replace it to the country. Had they
not advanced this capital to government, there would have been in
the country two capitals, two portions of the annual produce,
instead of one, employed in maintaining productive labour.

When for defraying the expense of government a revenue is raised
within the year from the produce of free or unmortgaged taxes, a
certain portion of the revenue of private people is only turned away
from maintaining one species of unproductive labour towards
maintaining another. Some part of what they pay in those taxes might
no doubt have been accumulated into capital, and consequently employed
in maintaining productive labour; but the greater part would
probably have been spent and consequently employed in maintaining
unproductive labour. The public expense, however, when defrayed in
this manner, no doubt hinders more or less the further accumulation of
new capital; but it does not necessarily occasion the destruction of
any actually existing capital.

When the public expense is defrayed by funding, it is defrayed
by the annual destruction of some capital which had before existed
in the country; by the perversion of some portion of the annual
produce which had before been destined for the maintenance of
productive labour towards that of unproductive labour. As in this
case, however, the taxes are lighter than they would have been had a
revenue sufficient for defraying the same expense been raised within
the year, the private revenue of individuals is necessarily less
burdened, and consequently their ability to save and accumulate some
part of that revenue into capital is a good deal less impaired. If the
method of funding destroys more old capital, it at the same time
hinders less the accumulation or acquisition of new capital than
that of defraying the public expense by a revenue raised within the
year. Under the system of funding, the frugality and industry of
private people can more easily repair the breaches which the waste and
extravagance of government may occasionally make in the general
capital of the society.

It is only during the continuance of war, however, that the system
of funding has this advantage over the other system. Were the
expense of war to be defrayed always by a revenue raised within the
year, the taxes from which that extraordinary revenue was drawn
would last no longer than the war. The ability of private people to
accumulate, though less during the war, would have been greater during
the peace than under the system of funding. War would not
necessarily have occasioned the destruction of any old capitals, and
peace would have occasioned the accumulation of many more new. Wars
would in general be more speedily concluded, and less wantonly
undertaken. The people feeling, during the continuance of the war, the
complete burden of it, would soon grow weary of it, and government, in
order to humour them, would not be under the necessity of carrying
it on longer than it was necessary to do so. The foresight of the
heavy and unavoidable burdens of war would hinder the people from
wantonly calling for it when there was no real or solid interest to
fight for. The seasons during which the ability of private people to
accumulate was somewhat impaired would occur more rarely, and be of
shorter continuance. Those, on the contrary, during which the
ability was in the highest vigour would be of much longer duration
than they can well be under the system of funding.

When funding, besides, has made a certain progress, the
multiplication of taxes which it brings along with it sometimes
impairs as much the ability of private people to accumulate even in
time of peace as the other system would in time of war. The peace
revenue of Great Britain amounts at present to more than ten
millions a year. If free and unmortgaged, it might be sufficient, with
proper management and without contracting a shilling of new debt, to
carry on the most vigorous war. The private revenue of the inhabitants
of Great Britain is at present as much encumbered in time of peace,
their ability to accumulate is as much impaired as it would have
been in the time of the most expensive war had the pernicious system
of funding never been adopted.

In the payment of the interest of the public debt, it has been
said, it is the right hand which pays the left. The money does not
go out of the country. It is only a part of the revenue of one set
of the inhabitants which is transferred to another, and the nation
is not a farthing the poorer. This apology is founded altogether in
the sophistry of the mercantile system, and after the long examination
which I have already bestowed upon that system, it may perhaps be
unnecessary to say anything further about it. It supposes, besides,
that the whole public debt is owing to the inhabitants of the country,
which happens not to be true; the Dutch, as well as several other
foreign nations, having a very considerable share in our public funds.
But though the whole debt were owing to the inhabitants of the
country, it would not upon that account be less pernicious.

Land and capital stock are the two original sources of all revenue
both private and public. Capital stock pays the wages of productive
labour, whether employed in agriculture, manufactures, or commerce.
The management of those two original sources of revenue belong to
two different sets of people; the proprietors of land, and the
owners or employers of capital stock.

The proprietor of land is interested for the sake of his own
revenue to keep his estate in as good condition as he can, by building
and repairing his tenants' houses, by making and maintaining the
necessary drains and enclosures, and all those other expensive
improvements which it properly belongs to the landlord to make and
maintain. But by different land-taxes the revenue of the landlord
may be so much diminished, and by different duties upon the
necessaries and conveniences of life that diminished revenue may be
rendered of so little real value, that he may find himself
altogether unable to make or maintain those expensive improvements.
When the landlord, however, ceases to do his part, it is altogether
impossible that the tenant should continue to do his. As the
distress of the landlord increases, the agriculture of the country
must necessarily decline.

When, by different taxes upon the necessaries and conveniences
of life, the owners and employers of capital stock find that
whatever revenue they derive from it will not, in a particular
country, purchase the same quantity of those necessaries and
conveniences which an equal revenue would in almost any other, they
will be disposed to remove to some other. And when, in order to
raise those taxes, all or the greater part of merchants and
manufacturers, that is, all or the greater part of the employers of
great capitals, come to be continually exposed to the mortifying and
vexatious visits of the tax-gatherers, the disposition to remove
will soon be changed into an actual removal. The industry of the
country will necessarily fall with the removal of the capital which
supported it, and the ruin of trade and manufactures will follow the
declension of agriculture.

To transfer from the owners of those two great sources of revenue,
land and capital stock, from the persons immediately interested in the
good condition of every particular portion of land, and in the good
management of every particular portion of capital stock, to another
set of persons (the creditors of the public, who have no such
particular interest), the greater part of the revenue arising from
either must, in the long-run, occasion both the neglect of land, and
the waste or removal of capital stock. A creditor of the public has no
doubt a general interest in the prosperity of the agriculture,
manufactures, and commerce of the country, and consequently in the
good condition of its lands, and in the good management of its capital
stock. Should there be any general failure or declension in any of
these things, the produce of the different taxes might no longer be
sufficient to pay him the annuity or interest which is due to him. But
a creditor of the public, considered merely as such, has no interest
in the good condition of any particular portion of land, or in the
good management of any particular portion of capital stock. As a
creditor of the public he has no knowledge of any such particular
portion. He has no inspection of it. He can have no care about it. Its
ruin may in some cases be unknown to him, and cannot directly affect
him.

The practice of funding has gradually enfeebled every state
which has adopted it. The Italian republics seem to have begun it.
Genoa and Venice, the only two remaining which can pretend to an
independent existence, have both been enfeebled by it. Spain seems
to have learned the practice from the Italian republics, and (its
taxes being probably less judicious than theirs) it has, in proportion
to its natural strength, been still more enfeebled. The debts of Spain
are of very old standing. It was deeply in debt before the end of
the sixteenth century, about a hundred years before England owed a
shilling. France, notwithstanding all its natural resources,
languishes under an oppressive load of the same kind. The republic
of the United Provinces is as much enfeebled by its debts as either
Genoa or Venice. Is it likely that in Great Britain alone a practice
which has brought either weakness or desolation into every other
country should prove altogether innocent?

The system of taxation established in those different countries,
it may be said, is inferior to that of England. I believe it is so.
But it ought to be remembered that, when the wisest government has
exhausted all the proper subjects of taxation, it must, in cases of
urgent necessity, have recourse to improper ones. The wise republic of
Holland has upon some occasions been obliged to have recourse to taxes
as inconvenient as the greater part of those of Spain. Another war
begun before any considerable liberation of the public revenue had
been brought about, and growing in its progress as expensive as the
last war, may, from irresistible necessity, render the British
system of taxation as oppressive as that of Holland, or even as that
of Spain. To the honour of our present system of taxation, indeed,
it has hitherto given so little embarrassment to industry that, during
the course even of the most expensive wars, the frugality and good
conduct of individuals seem to have been able, by saving and
accumulation, to repair all the breaches which the waste and
extravagance of government had made in the general capital of the
society. At the conclusion of the late war, the most expensive that
Great Britain ever waged, her agriculture was as flourishing, her
manufacturers as numerous and as fully employed, and her commerce as
extensive as they had ever been before. The capital, therefore,
which supported all those different branches of industry must have
been equal to what it had ever been before. Since the peace,
agriculture has been still further improved, the rents of houses
have risen in every town and village of the country- a proof of the
increasing wealth and revenue of the people; and the annual amount the
greater part of the old taxes, of the principal branches of the excise
and customs in particular, has been continually increasing- an equally
clear proof of an increasing consumption, and consequently of an
increasing produce which could alone support that consumption. Great
Britain seems to support with ease a burden which, half a century ago,
nobody believed her capable of supporting. Let us not, however, upon
this account rashly conclude that she is capable of supporting any
burden, nor even be too confident that she could support, without
great distress, a burden a little greater than what has already been
laid upon her.

When national debts have once been accumulated to a certain
degree, there is scarce, I believe, a single instance of their
having been fairly and completely paid. The liberation of the public
revenue, if it has ever been brought about by bankruptcy; sometimes by
an avowed one, but always by a real one, though frequently by a
pretended payment.

The raising of the denomination of the coin has been the most
usual expedient by which a real public bankruptcy has been disguised
under the appearance of a pretended payment. If a sixpence, for
example, should either by Act of Parliament or Royal Proclamation be
raised to the denomination of a shilling, and twenty sixpences to that
of a pound sterling, the person who under the old denomination had
borrowed twenty shillings, or near four ounces of silver, would, under
the new, pay with twenty sixpences, or with something less than two
ounces. A national debt of about a hundred and twenty-eight
millions, nearly the capital of the funded and unfunded debt of
Great Britain, might in this manner be paid with about sixty-four
millions of our present money. It would indeed be a pretended
payment only, and the creditors of the public would really be
defrauded of ten shillings in the pound of what was due to them. The
calamity, too, would extend much further than to the creditors of
the public, and those of every private person would suffer a
proportionable loss; and this without any advantage, but in most cases
with a great additional loss, to the creditors of the public. If the
creditors of the public, indeed, were generally much in debt to
other people, they might in some measure compensate their loss by
paying their creditors in the same coin in which the public had paid
them. But in most countries the creditors of the public are, the
greater part of them, wealthy people, who stand more in the relation
of creditors than in that of debtors towards the rest of their
fellow-citizens. A pretended payment of this kind, therefore,
instead of alleviating, aggravates in most cases the loss of the
creditors of the public, and without any advantage to the public,
extends the calamity to a great number of other innocent people. It
occasions a general and most pernicious subversion of the fortunes
of private people, enriching in most cases the idle and profuse debtor
at the expense of the industrious and frugal creditor, and
transporting a great part of the national capital from the hands which
were likely to increase and improve it to those which are likely to
dissipate and destroy it. When it becomes necessary for a state to
declare itself bankrupt, in the same manner as when it becomes
necessary for an individual to do so, a fair, open, and avowed
bankruptcy is always the measure which is both least dishonourable
to the debtor and least hurtful to the creditor. The honour of a state
is surely very poorly provided for when, in order to cover the
disgrace of a real bankruptcy, it has recourse to a juggling trick
of this kind, so easily seen through, and at the same time so
extremely pernicious.

Almost all states, however, ancient as well as modern, when
reduced to this necessity have, upon some occasions, played this
very juggling trick. The Romans, at the end of the first Punic war,
reduced the As, the coin or denomination by which they computed the
value of all their other coins, from containing twelve ounces of
copper to contain only two ounces; that is, they raised two ounces
of copper to a denomination which had always before expressed the
value of twelve ounces. The republic was, in this manner, enabled to
pay the great debts which it had contracted with the sixth part of
what it really owed. So sudden and so great a bankruptcy, we should in
the present times be apt to imagine, must have occasioned a very
violent popular clamour. It does not appear to have occasioned any.
The law which enacted it was, like all other laws relating to the
coin, introduced and carried through the assembly of the people by a
tribune, and was probably a very popular law. In Rome, as in all the
other ancient republics, the poor people were constantly in debt to
the rich and the great, who in order to secure their votes at the
annual elections, used to lend them money at exorbitant interest,
which, being never paid, soon accumulated into a sum too great
either for the debtor to pay, or for anybody else to pay for him.
The debtor, for fear of a very severe execution, was obliged,
without any further gratuity, to vote for the candidate whom the
creditor recommended. In spite of all the laws against bribery and
corruption, the bounty of the candidates, together with the occasional
distributions of corn which were ordered by the senate, were the
principal funds from which, during the latter times of the Roman
republic, the poorer citizens derived their subsistence. To deliver
themselves from this subjection to their creditors, the poorer
citizens were continually calling out either for an entire abolition
of debts, or for what they called New Tables; that is, for a law which
should entitle them to a complete acquittance upon paying only a
certain proportion of their accumulated debts. The law which reduced
the coin of all denominations to a sixth part of its former value,
as it enabled them to pay their debts with a sixth part of what they
really owed, was equivalent to the most advantageous New Tables. In
order to satisfy the people, the rich and the great were, upon several
different occasions, obliged to consent to laws both for abolishing
debts, and for introducing New Tables; and they probably were
induced to consent to this law partly for the same reason, and
partly that, by liberating the public revenue, they might restore
vigour to that government of which they themselves had the principal
direction. An operation of this kind would at once reduce a debt of
a hundred and twenty-eight millions to twenty-one millions three
hundred and thirty-three thousand three hundred and thirty-three
pounds six shillings and eightpence. In the course of the second Punic
war the As was still further reduced, first, from two ounces of copper
to one ounce, and afterwards from one ounce to half an ounce; that is,
to the twenty-fourth part of its original value. By combining the
three Roman operations into one, a debt of a hundred and
twenty-eight millions of our present money might in this manner be
reduced all at once to a debt of five millions three hundred and
thirty-three thousand three hundred and thirty-three pounds six
shillings and eightpence. Even the enormous debts of Great Britain
might in this manner soon be paid.

By means of such expedients the coin of, I believe, all nations
has been gradually reduced more and more below its original value, and
the same nominal sum has been gradually brought to contain a smaller
and a smaller quantity of silver.

Nations have sometimes, for the same purpose, adulterated the
standard of their coin; that is, have mixed a greater quantity of
alloy in it. If in the pound weight of our silver coin, for example,
instead of eighteen pennyweight, according to the present standard,
there was mixed eight ounces of alloy, a pound sterling, or twenty
shillings of such coin, would be worth little more than six
shillings and eightpence of our present money. The quantity of
silver contained in six shillings and eightpence of our present
money would thus be raised very nearly to the denomination of a
pound sterling. The adulteration of the standard has exactly the
same effect with what the French call an augmentation, or a direct
raising of the denomination of the coin.

An augmentation, or a direct raising of the coin, always is, and
from its nature must be, an open and avowed operation. By means of
it pieces of a smaller weight and bulk are called by the same name
which had before been given to pieces of a greater weight and bulk.
The adulteration of the standard, on the contrary, has generally
been a concealed operation. By means of it pieces were issued from the
mint of the same denominations, and, as nearly as could be
contrived, of the same weight, bulk, and appearance with pieces
which had been current before of much greater value. When King John of
France, in order to pay his debts, adulterated his coin, all the
officers of his mint were sworn to secrecy. Both operations are
unjust. But a simple augmentation is an injustice of open violence,
whereas the adulteration is an injustice of treacherous fraud. This
latter operation, therefore, as soon as it has been discovered, and it
could never be concealed very long, has always excited much greater
indignation than the former. The coin after any considerable
augmentation has very seldom been brought back to its former weight;
but after the greater adulterations it has almost always been
brought back to its former fineness. It has scarce ever happened
that the fury and indignation of the people could otherwise be
appeased.

In the end of the reign of Henry VIII and in the beginning of that
of Edward VI the English coin was not only raised in its denomination,
but adulterated in its standard. The like frauds were practised in
Scotland during the minority of James VI. They have occasionally
been practised in most other countries.

That the public revenue of Great Britain can never be completely
liberated, or even that any considerable progress can ever be made
towards that liberation, while the surplus of that revenue, or what is
over and above defraying the annual expense of the peace
establishment, is so very small, it seems altogether in vain to
expect. That liberation, it is evident, can never be brought about
without either some very considerable augmentation of the public
revenue, or some equally considerable reduction of the public expense.

A more equal land-tax, a more equal tax upon the rent of houses,
and such alterations in the present system of customs and excise as
those which have been mentioned in the foregoing chapter might,
perhaps, without increasing the burden of the greater part of the
people, but only distributing the weight of it more equally upon the
whole, produce a considerable augmentation of revenue. The most
sanguine projector, however, could scarce flatter himself that any
augmentation of this kind would be such as could give any reasonable
hopes either of liberating the public revenue altogether, or even of
making such progress towards that liberation in time of peace as
either to prevent or to compensate the further accumulation of the
public debt in the next war.

By extending the British system of taxation to all the different
provinces of the empire inhabited by people of either British or
European extraction, a much greater augmentation of revenue might be
expected. This, however, could scarce, perhaps, be done,
consistently with the principles of the British constitution,
without admitting into the British Parliament, or if you will into the
states general of the British empire, a fair and equal
representation of all those different provinces, that of each province
bearing the same proportion to the produce of its taxes as the
representation of Great Britain might bear to the produce of the taxes
levied upon Great Britain. The private interest of many powerful
individuals, the confirmed prejudices of great bodies of people
seem, indeed, at present, to oppose to so great a change such
obstacles as it may be very difficult, perhaps altogether
impossible, to surmount. Without, however, pretending to determine
whether such a union be practicable or impracticable, it may not,
perhaps, be improper, in a speculative work of this kind, to
consider how far the British system of taxation might be applicable to
all the different provinces of the empire, what revenue might be
expected from it if so applied, and in what manner a general union
of this kind might be likely to affect the happiness and prosperity of
the different provinces comprehended within it. Such a speculation can
at worst be regarded but as a new Utopia, less amusing certainly,
but not more useless and chimerical than the old one.

The land-tax, the stamp-duties, and the different duties of
customs and excise constitute the four principal branches of the
British taxes.

Ireland is certainly as able, and our American and West Indian
plantations more able to pay a land-tax than Great Britain. Where
the landlord is subject neither to tithe nor poor-rate, he must
certainly be more able to pay such a tax than where he is subject to
both those other burdens. The tithe, where there is no modus, and
where it is levied in kind, diminishes more what would otherwise be
the rent of the landlord than a land-tax which really amounted to five
shillings in the pound. Such a tithe will be found in most cases to
amount to more than a fourth part of the real rent of the land, or
of what remains after replacing completely the capital of the
farmer, together with his reasonable profit. If all moduses and all
impropriations were taken away, the complete church tithe of Great
Britain and Ireland could not well be estimated at less than six or
seven millions. If there was no tithe either in Great Britain or
Ireland, the landlords could afford to pay six or seven millions
additional land-tax without being more burdened than a very great part
of them are at present. America pays no tithe, and could therefore
very well afford to pay a land-tax. The lands in America and the
West Indies, indeed, are in general not tenanted nor leased out to
farmers. They could not therefore be assessed according to any
rent-roll. But neither were the lands of Great Britain, in the 4th
of William and Mary, assessed according to any rent-roll, but
according to a very loose and inaccurate estimation. The lands in
America might be assessed either in the same manner, or according to
an equitable valuation in consequence of an accurate survey like
that which was lately made in the Milanese, and in the dominions of
Austria, Prussia, and Sardinia.

Stamp-duties, it is evident, might be levied without any variation
in all countries where the forms of law process, and the deeds by
which property both real and personal is transferred, are the same
or nearly the same.

The extension of the custom-house laws of Great Britain to Ireland
and the plantations, provided it was accompanied, as in justice it
ought to be, with an extension of the freedom of trade, would be in
the highest degree advantageous to both. All the invidious
restraints which at present oppress the trade of Ireland, the
distinction between the enumerated and non-enumerated commodities of
America, would be entirely at an end. The countries north of Cape
Finisterre would be as open to every part of the produce of America as
those south of that Cape are to some parts of that produce at present.
The trade between all the different parts of the British empire would,
in consequence of this uniformity in the custom-house laws, be as free
as the coasting trade of Great Britain is at present. The British
empire would thus afford within itself an immense internal market
for every part of the produce of all its different provinces. So great
an extension of market would soon compensate both to Ireland and the
plantations all that they could suffer from the increase of the duties
of customs.

The excise is the only part of the British system of taxation
which would require to be varied in any respect according as it was
applied to the different provinces of the empire. It might be
applied to Ireland without any variation, the produce and
consumption of that kingdom being exactly of the same nature with
those of Great Britain. In its application to America and the West
Indies, of which the produce and consumption are so very different
from those of Great Britain, some modification might be necessary in
the same manner as in its application to the cyder and beer counties
of England.

A fermented liquor, for example, which is called beer, but
which, as it is made of molasses, bears very little resemblance to our
beer, makes a considerable part of the common drink of the people in
America. This liquor, as it can be kept only for a few days, cannot,
like our beer, be prepared and stored up for sale in great
breweries; but every private family must brew it for their own use, in
the same manner as they cook their victuals. But to subject every
private family to the odious visits and examination of the
tax-gatherers, in the same manner as we subject the keepers of
alehouses and the brewers for public sale, would be altogether
inconsistent with liberty. If for the sake of equality it was
thought necessary to lay a tax upon this liquor, it might be taxed
by taxing the material of which it is made, either at the place of
manufacture, or, if the circumstances of the trade rendered such an
excise improper, by laying a duty upon its importation into the colony
in which it was to be consumed. Besides the duty of one penny a gallon
imposed by the British Parliament upon the importation of molasses
into America, there is a provincial tax of this kind upon their
importation into Massachusetts Bay, in ships belonging to any other
colony, of eightpence the hogshead; and another upon their
importation, from the northern colonies into South Carolina, of
fivepence the gallon. Or if neither of these methods was found
convenient, each family might compound for its consumption of this
liquor, either according to the number of persons of which it
consisted, in the same manner as private families compound for the
malt-tax in England; or according to the different ages and sexes of
those persons, in the same manner as several different taxes are
levied in Holland; or nearly as Sir Matthew Decker proposes that all
taxes upon consumable commodities should be levied in England. This
mode of taxation, it has already been observed, when applied to
objects of a speedy consumption is not a very convenient one. It might
be adopted, however, in cases where no better could be done.

Sugar, rum, and tobacco are commodities which are nowhere
necessaries of life, which are become objects of almost universal
consumption, and which are therefore extremely proper subjects of
taxation. If a union with the colonies were to take place, those
commodities might be taxed either before they go out of the hands of
the manufacturer or grower, or if this mode of taxation did not suit
the circumstances of those persons, they might be deposited in
public warehouses both at the place of manufacture, and at all the
different ports of the empire to which they might afterwards be
transported, to remain there, under the joint custody of the owner and
the revenue officer, till such time as they should be delivered out
either to the consumer, to the merchant retailer for home consumption,
or to the merchant exporter, the tax not to be advanced till such
delivery. When delivered out for exportation, to go duty free upon
proper security being given that they should really be exported out of
the empire. These are perhaps the principal commodities with regard to
which a union with the colonies might require some considerable change
in the present system of British taxation.

What might be the amount of the revenue which this system of
taxation extended to all the different provinces of the empire might
produce, it must, no doubt, be altogether impossible to ascertain with
tolerable exactness. By means of this system there is annually
levied in Great Britain, upon less than eight millions of people, more
than ten millions of revenue. Ireland contains more than two
millions of people, and according to the accounts laid before the
congress, the twelve associated provinces of America contain more than
three. Those accounts, however, may have been exaggerated, in order,
perhaps, either to encourage their own people, or to intimidate
those of this country, and we shall suppose, therefore, that our North
American and West Indian colonies taken together contain no more
than three millions; or that the whole British empire, in Europe and
America, contains no more than thirteen millions of inhabitants. If
upon less than eight millions of inhabitants this system of taxation
raises a revenue of more than ten millions sterling, it ought upon
thirteen millions of inhabitants to raise a revenue of more than
sixteen millions two hundred and fifty thousand pounds sterling.
From this revenue, supposing that this system could produce it, must
be deducted the revenue usually raised in Ireland and the
plantations for defraying the expense of their respective civil
governments. The expense of the civil and military establishment of
Ireland, together with the interest of the public debt, amounts, at
a medium of the two years which ended March 1775, to something less
than seven hundred and fifty thousand pounds a year. By a very exact
account of the revenue of the principal colonies of America and the
West Indies, it amounted, before the commencement of the present
disturbances, to a hundred and forty-one thousand eight hundred
pounds. In this account, however, the revenue of Maryland, of North
Carolina, and of all our late acquisitions both upon the continent and
in the islands is omitted, which may perhaps make a difference of
thirty or forty thousand pounds. For the sake of even numbers,
therefore, let us suppose that the revenue necessary for supporting
the civil government of Ireland and the plantations may amount to a
million. There would remain consequently a revenue of fifteen millions
two hundred and fifty thousand pounds to be applied towards
defraying the general expense of the empire, and towards paying the
public debt. But if from the present revenue of Great Britain a
million could in peaceable times be spared towards the payment of that
debt, six millions two hundred and fifty thousand pounds could very
well be spared from this improved revenue. This great sinking fund,
too, might be augmented every year by the interest of the debt which
had been discharged the year before, and might in this manner increase
so very rapidly as to be sufficient in a few years to discharge the
whole debt, and thus to restore completely the at present
debilitated and languishing vigour of the empire. In the meantime
the people might be relieved from some of the most burdensome taxes;
from those which are imposed either upon the necessaries of life, or
upon the materials of manufacture. The labouring poor would thus be
enabled to live better, to work cheaper, and to send their goods
cheaper to market. The cheapness of their goods would increase the
demand for them, and consequently for the labour of those who produced
them. This increase in the demand for labour would both increase the
numbers and improve the circumstances of the labouring poor. Their
consumption would increase, and together with it the revenue arising
from all those articles of their consumption upon which the taxes
might be allowed to remain.

The revenue arising from this system of taxation, however, might
not immediately increase in proportion to the number of people who
were subjected to it. Great indulgence would for some time be due to
those provinces of the empire which were thus subjected to burdens
to which they had not before been accustomed, and even when the same
taxes came to be levied everywhere as exactly as possible, they
would not everywhere produce a revenue proportioned to the numbers
of the people. In a poor country the consumption of the principal
commodities subject to the duties of customs and excise is very small,
and in a thinly inhabited country the opportunities of smuggling are
very great. The consumption of malt liquors among the inferior ranks
of people in Scotland is very small, and the excise upon malt, beer,
and ale produces less there than in England in proportion to the
numbers of the people and the rate of the duties, which upon malt is
different on account of a supposed difference of quality. In these
particular branches of the excise there is not, I apprehend, much more
smuggling in the one country than in the other. The duties upon the
distillery, and the greater part of the duties of customs, in
proportion to the numbers of people in the respective countries,
produce less in Scotland than in England, not only on account of the
smaller consumption of the taxed commodities, but of the much
greater facility of smuggling. In Ireland the inferior ranks of people
are still poorer than in Scotland, and many parts of the country are
almost as thinly inhabited. In Ireland, therefore, the consumption
of the taxed commodities might, in proportion to the number of the
people, be still less than Scotland, and the facility of smuggling
nearly the same. In America and the West Indies the white people
even of the lowest rank are in much better circumstances than those of
the same rank in England, and their consumption of all the luxuries in
which they usually indulge themselves is probably much greater. The
blacks, indeed, who make the greater part of the inhabitants both of
the southern colonies upon the continent and of the West India
islands, as they are in a state of slavery, are, no doubt, in a
worse condition than the poorest people either in Scotland or Ireland.
We must not, however, upon that account, imagine that they are worse
fed, or that their consumption of articles which might be subjected to
moderate duties is less than that even of the lower ranks of people in
England. In order that they may work well, it is the interest of their
master that they should be fed well and kept in good heart in the same
manner as it is his interest that his working cattle should be so. The
blacks accordingly have almost everywhere their allowance of rum and
molasses or spruce beer in the same manner as the white servants,
and this allowance would not probably be withdrawn though those
articles should be subjected to moderate duties. The consumption of
the taxed commodities, therefore, in proportion to the number of
inhabitants, would probably be as great in America and the West Indies
as in any part of the British empire. The opportunities of
smuggling, indeed, would be much greater; America, in proportion to
the extent of the country, being much more thinly inhabited than
either Scotland or Ireland. If the revenue, however, which is at
present raised by the different duties upon malt and malt liquors were
to be levied by a single duty upon malt, the opportunity of
smuggling in the most important branch of the excise would be almost
entirely taken away: and if the duties of customs, instead of being
imposed upon almost all the different articles of importation, were
confined to a few of the most general use and consumption, and if
the levying of those duties were subjected to the excise laws, the
opportunity of smuggling, though not so entirely taken away, would
be very much diminished. In consequence of those two, apparently, very
simple and easy alterations, the duties of customs and excise might
probably produce a revenue as great in proportion to the consumption
of the most thinly inhabited province as they do at present in
proportion to that of the most populous.

The Americans, it has been said, indeed, have no gold or silver
money; the interior commerce of the country being carried on by a
paper currency, and the gold and silver which occasionally come
among them being all sent to Great Britain in return for the
commodities which they receive from us. But without gold and silver,
it is added, there is no possibility of paying taxes. We already get
all the gold and silver which they have. How is it possible to draw
from them what they have not?

The present scarcity of gold and silver money in America is not
the effect of the poverty of that country, or of the inability of
the people there to purchase those metals. In a country where the
wages of labour are so much higher, and the price of provisions so
much lower than in England, the greater part of the people must surely
have wherewithal to purchase a greater quantity if it were either
necessary or convenient for them to do so. The scarcity of those
metals, therefore, must be the effect of choice, and not of necessity.

It is for transacting either domestic or foreign business that
gold and silver money is either necessary or convenient.

The domestic business of every country, it has been shown in the
second book of this Inquiry, may, at least in peaceable times, be
transacted by means of a paper currency with nearly the same degree of
conveniency as by gold and silver money. It is convenient for the
Americans, who could always employ with profit in the improvement of
their lands a greater stock than they can easily get, to save as
much as possible the expense of so costly an instrument of commerce as
gold and silver, and rather to employ that part of their surplus
produce which would be necessary for purchasing those metals in
purchasing the instruments of trade, the materials of clothing,
several parts of household furniture, and the ironwork necessary for
building and extending their settlements and plantations; in
purchasing, not dead stock, but active and productive stock. The
colony governments find it for their interest to supply the people
with such a quantity of papermoney as is fully sufficient and
generally more than sufficient for transacting their domestic
business. Some of those governments, that of Pennsylvania
particularly, derive a revenue from lending this paper-money to
their subjects at an interest of so much per cent. Others, like that
of Massachusetts Bay, advance upon extraordinary emergencies a
paper-money of this kind for defraying the public expense, and
afterwards, when it suits the conveniency of the colony, redeem it
at the depreciated value to which it gradually falls. In 1747, that
colony paid, in this manner, the greater part of its public debts with
the tenth part of the money for which its bills had been granted. It
suits the conveniency of the planters to save the expense of employing
gold and silver money in their domestic transactions, and it suits the
conveniency of the colony governments to supply them with a medium
which, though attended with some very considerable disadvantages,
enables them to save that expense. The redundancy of paper-money
necessarily banishes gold and silver from the domestic transactions of
the colonies, for the same reason that it has banished those metals
from the greater part of the domestic transactions in Scotland; and in
both countries it is not the poverty, but the enterprising and
projecting spirit of the people, their desire of employing all the
stock which they can get as active and productive stock, which has
occasioned this redundancy of paper-money.

In the exterior commerce which the different colonies carry on
with Great Britain, gold and silver are more or less employed
exactly in proportion as they are more or less necessary. Where
those metals are not necessary they seldom appear. Where they are
necessary they are generally found.

In the commerce between Great Britain and the tobacco colonies the
British goods are generally advanced to the colonists at a pretty long
credit, and are afterwards paid for in tobacco, rated at a certain
price. It is more convenient for the colonists to pay in tobacco
than in gold and silver. It would be more convenient for any
merchant to pay for the goods which his correspondents had sold to him
in some other sort of goods which he might happen to deal in than in
money. Such a merchant would have no occasion to keep any part of
his stock by him unemployed, and in ready money, for answering
occasional demands. He could have, at all times, a larger quantity
of goods in his shop or warehouse, and he could deal to a greater
extent. But it seldom happens to be convenient for all the
correspondents of a merchant to receive payment for the goods which
they sell to him in goods of some other kind which he happens to
deal in. The British merchants who trade to Virginia and Maryland
happen to be a particular set of correspondents, to whom it is more
convenient to receive payment for the goods which they sell to those
colonies in tobacco than in gold and silver. They expect to make a
profit by the sale of the tobacco. They could make none by that of the
gold and silver. Gold and silver, therefore, very seldom appear in the
commerce between Great Britain and the tobacco colonies. Maryland
and Virginia have as little occasion for those metals in their foreign
as in their domestic commerce. They are said, accordingly, to have
less gold and silver money than any other colonies in America. They
are reckoned, however, as thriving, and consequently as rich, as any
of their neighbours.

In the northern colonies, Pennsylvania, New York, New Jersey,
the four governments of New England, etc., the value of their own
produce which they export to Great Britain is not equal to that of the
manufactures which they import for their own use, and for that of some
of the other colonies to which they are the carriers. A balance,
therefore, must be paid to the mother country in gold and silver,
and this balance they generally find.

In the sugar colonies the value of the produce annually exported
to Great Britain is much greater than that of all the goods imported
from thence. If the sugar and rum annually sent to the mother
country were paid for in those colonies, Great Britain would be
obliged to send out every year a very large balance in money, and
the trade to the West Indies would, by a certain species of
politicians, be considered as extremely disadvantageous. But it so
happens that many of the principal proprietors of the sugar
plantations reside in Great Britain. Their rents are remitted to
them in sugar and rum, the produce of their estates. The sugar and rum
which the West India merchants purchase in those colonies upon their
own account are not equal in value to the goods which they annually
sell there. A balance, therefore, must necessarily be paid to them
in gold and silver, and this balance, too, is generally found.

The difficulty and irregularity of payment from the different
colonies to Great Britain have not been at all in proportion to the
greatness or smallness of the balances which were respectively due
from them. Payments have in general been more regular from the
northern than from the tobacco colonies, though the former have
generally paid a pretty large balance in money, while the latter
have either paid no balance, or a much smaller one. The difficulty
of getting payment from our different sugar colonies has been
greater or less in proportion, not so much to the extent of the
balances respectively due from them, as to the quantity of
uncultivated land which they contained; that is, to the greater or
smaller temptation which the planters have been under of
overtrading, or of undertaking the settlement and plantation of
greater quantities of waste land than suited the extent of their
capitals. The returns from the great island of Jamaica, where there is
still much uncultivated land, have, upon this account, been in general
more irregular and uncertain than those from the smaller islands of
Barbadoes, Antigua, and St. Christophers, which have for these many
years been completely cultivated, and have, upon that account,
afforded less field for the speculations of the planter. The new
acquisitions of Grenada, Tobago, St. Vincents, and Dominica have
opened a new field for speculations of this kind, and the returns from
those islands have of late been as irregular and uncertain as those
from the great island of Jamaica.

It is not, therefore, the poverty of the colonies which occasions,
in the greater part of them, the present scarcity of gold and silver
money. Their great demand for active and productive stock makes it
convenient for them to have as little dead stock as possible, and
disposes them upon that account to content themselves with a cheaper
though less commodious instrument of commerce than gold and silver.
They are thereby enabled to convert the value of that gold and
silver into the instruments of trade, into the materials of
clothing, into household furniture, and into the ironwork necessary
for building and extending their settlements and plantations. In those
branches of business which cannot be transacted without gold and
silver money, it appears that they can always find the necessary
quantity of those metals; and if they frequently do not find it, their
failure is generally the effect, not of their necessary poverty, but
of their unnecessary and excessive enterprise. It is not because
they are poor that their payments are irregular and uncertain, but
because they are too eager to become excessively rich. Though all that
part of the produce of the colony taxes which was over and above
what was necessary for defraying the expense of their own civil and
military establishments were to be remitted to Great Britain in gold
and silver, the colonies have abundantly wherewithal to purchase the
requisite quantity of those metals. They would in this case be
obliged, indeed, to exchange a part of their surplus produce, with
which they now purchase active and productive stock, for dead stock.
In transacting their domestic business they would be obliged to employ
a costly instead of a cheap instrument of commerce, and the expense of
purchasing this costly instrument might damp somewhat the vivacity and
ardour of their excessive enterprise in the improvement of land. It
might not, however, be necessary to remit any part of the American
revenue in gold and silver. It might be remitted in bills drawn upon
and accepted by particular merchants or companies in Great Britain
to whom a part of the surplus produce of America had been consigned,
who would pay into the treasury the American revenue in money, after
having themselves received the value of it in goods; and the whole
business might frequently be transacted without exporting a single
ounce of gold or silver from America.

It is not contrary to justice that both Ireland and America should
contribute towards the discharge of the public debt of Great
Britain. That debt has been contracted in support of the government
established by the Revolution, a government to which the Protestants
of Ireland owe, not only the whole authority which they at present
enjoy in their own country, but every security which they possess
for their liberty, their property, and their religion; a government to
which several of the colonies of America owe their present charters,
and consequently their present constitution, and to which all the
colonies of America owe the liberty, security, and property which they
have ever since enjoyed. That public debt has been contracted in the
defence, not of Great Britain alone, but of all the different
provinces of the empire; the immense debt contracted in the late war
in particular, and a great part of that contracted in the war
before, were both properly contracted in defence of America.

By a union with Great Britain, Ireland would gain, besides the
freedom of trade, other advantages much more important, and which
would much more than compensate any increase of taxes that might
accompany that union. By the union with England the middling and
inferior ranks of people in Scotland gained a complete deliverance
from the power of an aristocracy which had always before oppressed
them. By a union with Great Britain the greater part of the people
of all ranks in Ireland would gain an equally complete deliverance
from a much more oppressive aristocracy; an aristocracy not founded,
like that of Scotland, in the natural and respectable distinctions
of birth and fortune, but in the most odious of all distinctions,
those of religious and political prejudices; distinctions which,
more than any other, animate both the insolence of the oppressors
and the hatred and indignation of the oppressed, and which commonly
render the inhabitants of the same country more hostile to one another
than those of different countries ever are. Without a union with Great
Britain the inhabitants of Ireland are not likely for many ages to
consider themselves as one people.

No oppressive aristocracy has ever prevailed in the colonies. Even
they, however, would, in point of happiness and tranquility, gain
considerably by a union with Great Britain. It would, at least,
deliver them from those rancorous and virulent factions which are
inseparable from small democracies, and which have so frequently
divided the affections of their people, and disturbed the tranquillity
of their governments, in their form so nearly democratical. In the
case of a total separation from Great Britain, which, unless prevented
by a union of this kind, seems very likely to take place, those
factions would be ten times more virulent than ever. Before the
commencement of the present disturbances, the coercive power of the
mother country had always been able to restrain those factions from
breaking out into anything worse than gross brutality and insult. If
that coercive power were entirely taken away, they would probably soon
break out into open violence and bloodshed. In all great countries
which are united under one uniform government, the spirit of party
commonly prevails less in the remote provinces than in the centre of
the empire. The distance of those provinces from the capital, from the
principal seat of the great scramble of faction and ambition, makes
them enter less into the views of any of the contending parties, and
renders them more indifferent and impartial spectators of the
conduct of all. The spirit of party prevails less in Scotland than
in England. In the case of a union it would probably prevail less in
Ireland than in Scotland, and the colonies would probably soon enjoy a
degree of concord and unanimity at present unknown in any part of
the British empire. Both Ireland and the colonies, indeed, would be
subjected to heavier taxes than any which they at present pay. In
consequence, however, of a diligent and faithful application of the
public revenue towards the discharge of the national debt, the greater
part of those taxes might not be of long continuance, and the public
revenue of Great Britain might soon be reduced to what was necessary
for maintaining a moderate peace establishment.

The territorial acquisitions of the East India Company, the
undoubted right of the crown, that is, of the state and people of
Great Britain, might be rendered another source of revenue more
abundant, perhaps, than all those already mentioned. Those countries
are represented as more fertile, more extensive, and, in proportion to
their extent, much richer and more populous than Great Britain. In
order to draw a great revenue from them, it would not probably be
necessary to introduce any new system of taxation into countries which
are already sufficiently and more than sufficiently taxed. It might,
perhaps, be more proper to lighten than to aggravate the burden of
those unfortunate countries, and to endeavour to draw a revenue from
them, not by imposing new taxes, but by preventing the embezzlement
and misapplication of the greater part of those which they already
pay.

If it should be found impracticable for Great Britain to draw
any considerable augmentation of revenue from any of the resources
above mentioned, the only resource which can remain to her is a
diminution of her expense. In the mode of collecting and in that of
expending the public revenue, though in both there may be still room
for improvement, Great Britain seems to be at least as economical as
any of her neighbours. The military establishment which she
maintains for her own defence in time of peace is more moderate than
that of any European state which can pretend to rival her either in
wealth or in power. None of those articles, therefore, seem to admit
of any considerable reduction of expense. The expense of the peace
establishment of the colonies was, before the commencement of the
present disturbances, very considerable, and is an expense which
may, and if no revenue can be drawn from them ought certainly to be
saved altogether. This constant expense in time of peace, though
very great, is insignificant in comparison with what the defence of
the colonies has cost us in time of war. The last war, which was
undertaken altogether on account of the colonies, cost Great
Britain, it has already been observed, upwards of ninety millions. The
Spanish war of 1739 was principally undertaken on their account, in
which, and in the French war that was the consequence of it, Great
Britain spent upwards of forty millions, a great part of which ought
justly to be charged to the colonies. In those two wars the colonies
cost Great Britain much more than double the sum which the national
debt amounted to before the commencement of the first of them. Had
it not been for those wars that debt might, and probably would by this
time, have been completely paid; and had it not been for the colonies,
the former of those wars might not, and the latter certainly would not
have been undertaken. It was because the colonies were supposed to
be provinces of the British empire that this expense was laid out upon
them. But countries which contribute neither revenue nor military
force towards the support of the empire cannot be considered as
provinces. They may perhaps be considered as appendages, as a sort
of splendid and showy equipage of the empire. But if the empire can no
longer support the expense of keeping up this equipage, it ought
certainly to lay it down; and if it cannot raise its revenue in
proportion to its expense, it ought, at least, to accommodate its
expense to its revenue. If the colonies, notwithstanding their refusal
to submit to British taxes, are still to be considered as provinces of
the British empire, their defence in some future war may cost Great
Britain as great an expense as it ever has done in any former war. The
rulers of Great Britain have, for more than a century past, amused the
people with the imagination that they possessed a great empire on
the west side of the Atlantic. This empire, however, has hitherto
existed in imagination only. It has hitherto been, not an empire,
but the project of an empire; not a gold mine, but the project of a
gold mine; a project which has cost, which continues to cost, and
which, if pursued in the same way as it has been hitherto, is likely
to cost, immense expense, without being likely to bring any profit;
for the effects of the monopoly of the colony trade, it has been
shown, are, to the great body of the people, mere loss instead of
profit. It is surely now time that our rulers should either realize
this golden dream, in which they have been indulging themselves,
perhaps, as well as the people, or that they should awake from it
themselves, and endeavour to awaken the people. If the project
cannot be completed, it ought to be given up. If any of the
provinces of the British empire cannot be made to contribute towards
the support of the whole empire, it is surely time that Great
Britain should free herself from the expense of defending those
provinces in time of war, and of supporting any part of their civil or
military establishments in time of peace, and endeavour to accommodate
her future views and designs to the real mediocrity of her
circumstances.